The Tribune

By  ANNELIA NIXON

Tribune Business Reporter

anixon@tribunemedia.net

THE Bahamas’ improving fiscal position, declining debt burden and growing revenue base are strengthening investor confidence and creating new opportunities for long-term investment, financial executives and government officials are both asserting.

David Slatter, vice-president and group head of investments at RF Group of Companies, told the Financial Voice seminar on the 2026-2027 Budget that investors are paying close attention to The Bahamas’ progress since the COVID-19 pandemic.

“If you look at the progress made from a fiscal standpoint since COVID, with the debt-to-GDP ratio coming down from just under 100 percent to the low 70 percents, that’s a very good sign,” Mr Slatter said.

“The private sector, the investment community is paying close attention to the continued progress from a fiscal standpoint, and we appreciate the efforts of the Government.”

Mr Slatter argued that continued fiscal discipline could pave the way for additional sovereign credit rating upgrades and lower financing costs, encouraging greater levels of private investment.

“It builds confidence,” he said. “It doesn’t mean we’re there yet, but it does mean that the private sector expects perhaps further credit upgrades from the rating agencies and, hopefully, a lower expected internal rate of return on investment,” he said.

Kriston Moore, portfolio manager at CG Atlantic Pensions, said long-term investors are less focused on a single year’s surplus and more interested in the broader fiscal trajectory.

“What stands out to me is really the overall direction we’re heading in,” Mr Moore said. “We had a rough few years coming out of the pandemic and following Hurricane Dorian. I think the trajectory since then has been very positive.

“It’s one thing to have a surplus in one year, but can we maintain that over the long term? Can we get to the point where our credit profile improves and is sustainable?”

Both investment executives highlighted the importance of building fiscal buffers in a country highly exposed to hurricanes and external economic shocks. Mr Moore said stronger government finances improve not only economic resilience but also investor sentiment.

“We already acknowledge that we’re in a very high-risk zone,” he said. “We think about the potential hurricanes and external shocks that we’re exposed to, so building some level of fiscal space and ability to absorb those shocks does a lot - not just for the economy, but for investor confidence.”

Mr Moore added that government debt has become significantly more attractive to investors compared to the pandemic period. “In today’s world, as an investor, you’re much more willing to extend out into the long-term,” he said.

A key factor driving that confidence is the Government’s evolving debt management strategy. Mr Moore argued that while public discussion often centres on the size of government debt, investors are increasingly focused on how that debt is structured.

“They’ve been able to refinance at lower rates,” he said. “They’ve switched over to sourcing more of their borrowing from the domestic side as opposed to international. They’ve been able to extend maturities. Things like that we have to pay attention to outside of just looking at the debt number going up.”

Mr Slatter echoed that view, saying markets have already begun recognising The Bahamas’ fiscal improvements. “I think investors look at what’s happening as definitely moving in the right direction; not quite there yet, but making steady progress,” he said.

The RF Group of Companies investment chief suggested that Bahamian sovereign debt continues to offer attractive yields relative to regional peers, and that narrowing risk premiums could create investment opportunities.

The Government’s efforts to generate sustained surpluses are also being supported by stronger revenue performance, particularly from tourism and the newly-introduced Domestic Minimum Top-Up Tax that imposes a 15 percent corporate income tax on qualifying entities.

Simon Wilson, the Ministry of Finance’s financial secretary, described the DMTT, which applies to large foreign-owned multinational companies operating in The Bahamas which are part of groups with an annual turnover exceeding 750m euros, as an important contributor to future revenue growth.

“We expect around $120 million” from the tax in the current fiscal year, Mr Wilson said. “Next fiscal year, we’re projecting $330m, and going forward it will continue to grow.”

However, he stressed that tourism will remain the dominant driver of revenue growth and the country’s path toward investment-grade status. “The most significant driver is going to be tourism and tourism activity,” Mr Wilson said. “We believe tourism is going to drive us towards investment grade.”

Mr Wilson voiced confidence that revenue projections are achievable, citing rapid growth in cruise tourism and increasing visitor spending. “You look at cruise arrivals, double-digit growth, 20 percent year-over-year and growing at a very rapid pace,” he said.

Highlighting recent tourism performance, Mr Wilson noted that Nassau Cruise Port recently recorded its busiest day ever, welcoming more than 33,000 visitors. Mr Moore said investors are paying close attention not only to revenue growth but also to the quality of those revenues.

“We’re also looking at the quality of the revenues,” he said. “The quality of revenues contributes to the overall fiscal stability, and I think investors look at that.” While acknowledging that tourism remains the country’s primary economic engine, it was argued that diversification remains essential for long-term stability.

“Tourism is not going anywhere,” Mr Moore said. “We will always be an economy that’s probably primarily driven by tourism. That’s the primary growth engine.”

However, he pointed to opportunities in energy reform, financial services, infrastructure development and geographic expansion of tourism activity throughout the Family Islands. “I think overall the diversification is important, but I think we can find different growth engines even within tourism for foreign direct investment,” Mr Moore said.

Mr Slatter identified financial services, renewable energy, infrastructure projects and digital economy initiatives as sectors with strong growth potential. He also highlighted opportunities in solar energy development, public-private partnerships and government modernisation initiatives.

The discussion also turned to ensuring Bahamians benefit more directly from foreign investment. Mr Wilson said the Government intends to review and strengthen the National Investment Policy to increase opportunities for Bahamian businesses, workers and investors.

“We have to be stronger in reserving sectors for Bahamians and encouraging foreign direct investors to utilise Bahamian products, Bahamian labour, Bahamian expertise and also Bahamian capital,” he said.

Mr Wilson argued that institutional investors should have greater opportunities to participate in major developments alongside foreign investors. “Bahamian capital should be able to be utilised to make that investment,” he said. “Give local investors more opportunities; give institutional investors more opportunities.”