Michael Halkitis
By SANCHESKA BROWN
Tribune Staff Reporter
sbrown@tribunemedia.net
THE government is “hopeful” the country’s credit rating will not be downgraded after having a series of “constructive” meetings with Wall Street rating agency Moody’s last week, Minister of State for Finance Michael Halkitis said yesterday.
Mr Halkitis said representatives from Moody’s met with both government and private sector organisations over a two-day period and now the Christie administration has to “wait and see” what the agency’s review will be at the end August.
His comments came two weeks after Moody’s announced it was placing the country “on review” for a potential downgrade, due to both its unexpected economic contraction and further deterioration in the government’s fiscal position.
At the time, Moody’s pointed out that “debt accumulation” has continued to increase, with the government consistently failing to hit its budget projections, and the adequacy and effectiveness of its policy responses to The Bahamas’ problems.
Moody’s warned that any potential downgrade could be “by one notch or more.” The country currently has a ‘Baa2’ rating, two notches away from being cut to so-called “junk” status – a position where it will lose its existing investment grade status.
“We met with them last Tuesday and Wednesday. They met with the prime minister and Mr Christie gave them an overview of our expectations particularly with investments,” Mr Halkitis said.
“They also had a technical meeting with me at the Ministry of Finance where we spoke about the budget and crunched numbers. They also met with the Central Bank, the Chamber of Commerce, the Ministry of Tourism, the Bahamas Hotel Association and the Clearing Bank (Association). They have some concerns about revisions to the economic growth numbers that were released by the Department of Statistics, so they met with representatives from there as well and we broke down the methods and showed what contributed to the data and gave them a better understanding why those revisions took place.
“After all the meetings, they came back to us and asked us for additional information. They have a committee they have to deal with and now we just have to wait and see.”
The country has until August to convince Moody’s not to downgrade its credit rating and is also in the middle of the “six-24 month” period set by Standard & Poor’s, another credit rating agency, to determine whether it will follow through on the “greater than one-in-three chance” of a Bahamas downgrade.
In a statement released after the Moody’s announcement, the government said the country is not exempt from the lower commodity prices and external investment uncertainty through the loss of correspondent bank services that is being felt in the Caribbean region.
“Although the Bahamas has not been completely exempt from any of these phenomena, the government is confident that this review will reveal that medium-term economic prospects for the Bahamas are good given projected foreign direct investment, the government’s fiscal consolidation efforts and the implementation of innovative policy initiatives with respect to certain structural constraints the country has faced in the energy sector and labour market.
“The government’s position is that ongoing construction at various projects around the country is generating significant economic activity.”
The statement added that there “is no question” that economic activity in much of the country is higher than three years ago.
“Growth prospects for the Bahamian economy are also very good with the imminent restart of construction at Baha Mar and its subsequent opening. In addition, challenges within the energy sector are being addressed by the new private sector management team at Bahamas Power and Light and the benefits of this will be realised in the short-term.”
The government also said it is addressing rising debt through a fiscal consolidation plan, adding that the successful roll-out of value added tax in 2015 shows the Christie administration’s commitment to this.
Comments
birdiestrachan 8 years, 4 months ago
It is my prayer that the Bahamas avoids a down grade. But there are many who will rejoice if the Bahamas is down graded. But a down grade will be bad for the Bahamas and all of its people. There is no need to rejoice.
Zakary 8 years, 4 months ago
And who will be at this party to celebrate a downgrade if it happens? Do you suppose there will be an after party of rejoicing too? Enlighten me.
Sometimes when I think you couldn't write something more crazed, you just go ahead and set a new record. Damn, that’s some really twisted thinking you’ve got going on there, seriously.
Honestman 8 years, 4 months ago
You are such a deluded air-head Birdie Strachan. No-one will be rejoicing when we are downgraded again. People are in the depths of dispair over the mismanagement and dishonesty of this administration. All that VAT money squandered on higher and unnecessary government expenditure. A lost opportunity to get our fiscal house in order. We have a white elephant of a complex on Cable Beach deteriorating by the day and now effectively owned by a Chinese government that does't give a damn about The Bahamas. And you think any of us will be rejoicing if Moody's takes the inevitable action? Are you out of your tiny mind?
realfreethinker 8 years, 4 months ago
Maybe if you "pray" for your lousy government to get to work fixing the economy and cut back on the wasteful spending,then we wont be threatened with a downgrade. birdiestrachan must be a troll. No one can be that simple and able to use a computer to type the trash that he or she writes
killemwitdakno 8 years, 4 months ago
Why doesn't tourism cover $200M for expenses annually? $200 in direct and indirect taxes from 1M visitors a year should ha been it. Besides that I don't see how can tourism be considered a growth indicator when it's only dependency?
Meet this mark so that when Bahama Mar opens these greedy creditor bitches won't have claim to percentage of the revenue.
Low duty for business bringing in products would have been more VAT for gov if they're thinking!
killemwitdakno 8 years, 4 months ago
Hall it's can't be trusted, he should have been FIRED for his previous miscalculations. False forecast after false firecast. Rushing to meet with creditors was for the Baha Mar emergency only, it can't be a continued thing or we won't have that avenue in a future tragedy.
Find a bloody $200M annually for gov expenses. List the jobs that you're not counting. Simple.
killemwitdakno 8 years, 4 months ago
FNMs aren't that bitter birdie
killemwitdakno 8 years, 4 months ago
The easiest thing would have been if the deficit had not increased , if carnival was put off for 3 yrs.
killemwitdakno 8 years, 4 months ago
The boats had to be purchased because of the immigration urgency.
killemwitdakno 8 years, 4 months ago
The planes were ready to give way.
alfalfa 8 years, 4 months ago
What happened to the threats to fire Moody's?
asiseeit 8 years, 4 months ago
Mismanagement of the country by lackluster and childish leadership that has no clue what a REAL leader is has brought us to this place. Those in government or that have been in government over the last 40 odd years should hang their heads in shame. It is their failure as managers of this country that has caused the pain and suffering being felt by the majority of Bahamians today. My go just go to ANY government office an take a look at the state it is in and you will get an idea as to the level of mismanagement. Government and the civil service are complete failures and are the main problem within The Bahamas.
OMG 8 years, 4 months ago
The VAT money was just like a candy box for these idiots who spent I excess of the extra revenue earned. I foresee VAT going to 10% and they will still not reign in expenditure. Things are tough, kids and adults don't eat properly, Can't pay their light bills, Can't get medication because the clinics are out but we get double taxed with VAT on VAT on duty. Recent picture posted by students in Windermere High school contrasted what $50 buys in USA and the paltry amount in the Bahamas. Amazing difference. These dim wits need to think outside the box, give tax breaks to Alburys when they import and can beans, Confiscate cars being sold illegally by the roadside, Tax the owners of rental houses ,Prosecute all those stealing from their respective ministries. Will it happen -No because first and foremost at any cost don't displease the electorate who will see you returned to your nice well paying positions. Funny how there is total silence from the PM on the white elephant hotel ?
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