The Tribune

By NICO SCAVELLA

Tribune Staff Reporter

nscavella@tribunemedia.net

FREE National Movement Deputy Leader Peter Turnquest yesterday lamented the country’s creditworthiness being downgraded to one notch above ‘junk’ status by an international credit rating agency, as he said the country is “now in the class of the lowest performing economies in the world”.

Mr Turnquest, during a press conference yesterday, said while The Bahamas is “fortunate” it wasn’t hit with a “double downgrade” by Wall Street rating agency Moody’s Investor Service, the downgrade highlights the country’s “anaemic” economic growth and “does not portend well for the future of our economy and our economic stability.”

Mr Turnquest ultimately encouraged the Christie administration to be “religious” and “disciplined” in adhering to its own proposed consolidation plan, charging that the government has thus far “disappointed not only the Bahamian people but obviously all of the ratings agencies with respect to what they’ve been able to achieve as compared to what they promised.”

Earlier this week, Moody’s announced that it has downgraded The Bahamas’ credit rating by one notch mainly because of the country’s “low medium-term growth” prospects and limited fiscal space compared to similar countries.

The Wall Street ratings agency downgraded the country’s sovereign creditworthiness by a single notch, from Baa3 to Baa2 with a “stable outlook.”

Moody’s had previously opened the door to the possibility of downgrading the country’s sovereign credit worthiness by “one or more notches,” with a two-notch slash taking the country’s rating to ‘junk’ status.

State Minister for Finance Michael Halkitis subsequently said the Christie administration is “relieved” that Moody’s had decided to only downgrade The Bahamas’ rating by a single notch, noting that economic developments over the next 12-18 months should improve the nation’s outlook.

“I take note of the minister of state for finance’s assessment of the downgrade in that we are fortunate that we did not receive a double downgrade to junk status,” Mr Turnquest said yesterday.

“However, we are now in the class of the lowest performing economies in the world. That is nothing to celebrate. We have some serious structural issues in our economy that need to be addressed. We have a growing debt that even despite the increase of taxation through VAT, we have not been able to arrest.

“…Despite having increased taxes on the Bahamian people through value added tax we’re still incurring comparable levels of recurring deficit and as a result of that our national debt is continuing to escalate at an accelerated rate,” he added. “Unless we can get our spending under control, unless we can implement fiscal policies and controls that are going to protect the government’s revenue, we’re going to continue to face challenges in terms of ratings and in terms of the stability of our economy.”

Mr Turnquest went on to lament the country’s “negative” economic growth, something he said is not likely to improve in the short to medium term, save for the eventual opening of Baha Mar, which is expected to provide a well needed boost to the country’s economy.

“If we’re lucky Baha Mar starts and we can pick up a little bit of steam from that,” he said. “But the reality is we’re struggling with anaemic growth, and at the same time incurring debt in excess of that growth. This all does not portend well for the future of our economy and our economic stability.

“And so we’re grateful and certainly thankful that we didn’t get a double downgrade, however we encourage the government to stick to its proposed consolidation plan, to be religious about it and disciplined about it, because for the last four years they have disappointed not only the Bahamian people but obviously all of the ratings agencies with respect to what they’ve been able to achieve as compared to what they promised.”

On Tuesday, Mr Halkitis insisted that the government remains optimistic about The Bahamas’ economic future, adding that barring any “unforeseen circumstances,” the government now has anywhere from 18 to 24 months before Moody’s takes any further action and makes the needed improvements.