Minister of State for Finance Michael Halkitis revealed yesterday that the government had successful meetings with Wall Street rating company Moody’s last week after the company recently announced that The Bahamas was being placed “on review” for a potential downgrade due to the government’s failing fiscal position and the country’s unexpected economic reduction.
“The prime minister met with them and gave them an overview of the Bahamian economy and we told them about projects in the pipeline and the reasons why we are optimistic that our economy may grow,” he told the Journal Sunday.
The minister noted however that the company was concerned about revisions to the economic growth numbers that were released by the Department of Statistics recently.
Data released by the Department of Statistics showed that “constant price” GDP contracted by 1.66 per cent last year.
However, the international credit rating agency along with the International Monetary Fund (IMF) said that the Bahamian economy expanded around one per cent last year.
Recently, the IMF warned the Christie administration that it is too optimistic with its budget projections.
The latest report warned that The Bahamas’ deficit will be around $100 million higher than the forecasted projections by the PLP for the 2015-2016 fiscal year.
Executive directors of the IMF highlighted that the need for the Bahamas to improve its fiscal consolidation and competitiveness, reduce unemployment and raise potential growth.
Minister Halkitis said the government explained to Moody’s executives the reasoning why there was some shortfalls.
“The three main things were Morton Salt, the damage by Hurricane Joaquin which damaged the capacity to export and then another thing was the Hutchinson and Whampoa with salt air exports declined,” he said.
“They have a better understanding after being able to sit down with officials to see what is going on and what contributed to the low growth and the revision by the Department of Statistics; that was their main concern that the economic growth numbers were revised downward.”
He also said another concern of Moody’s was delay of construction in regards to Baha Mar.
“They then went and met with tourism officials, Bahamas Hotel and Tourism Association people and the clearing banks,” he said.
“We were able to point out to them that we are still optimistic about the economy. They will go back and with the information will come back with their findings.
“We thought the meetings were constructive but having said that they have a committee that they have to report to and we are looking forward to that.”
In its initial report, Moody’s said within the next two months, the country could face a fresh credit rating downgrade due to two consecutive years of a recession.
The credit rating company also expressed concern over the government’s consolidation plan, which has yet to arrest the growth in the $6.6 billion national debt.
