Free National Movement (FNM) Deputy Leader and Shadow Minister for finance Peter Turnquest yesterday weighed in on credit agency Moody’s decision to downgrade The Bahamas from BAA3 status to BAA2 with a stable outlook.
Mr. Turnquest responded to State Minister for Finance Michael Halkitis’ optimism, adding that the downgrade puts the country in a very unsavory group and it is nothing to celebrate.
“I take note of the state minister of Finance’s assessment of the downgrade in him saying we are fortunate not to receive a double downgrade to junk status; 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,” he said.
“We have a growing debt that despite the increase taxation from VAT we’ve not been able to arrest.”
Mr. Turnquest added that despite the state minister’s assertions, financial experts speculate that the current fiscal deficit which is currently $141 million is now projected to be over $300 million.
He added that the national debt is increasing at an accelerated rate and unless the government can get its spending under control the country is going to continue to face challenges in terms of ratings.
Mr. Turnquest added that the long term prospects for the country’s economic viability are very bleak because of little to no growth that took place under the current administration.
“The truth of the matter is that we’ve been growing at less than one per cent and had negative growth over the last two years.
“If we’re lucky, Baha Mar starts and we can pick up a little bit of steam from that, but the reality is that we are struggling with anemic growth and at the same time incurring debt in excess of that growth, and this all doesn’t portend well for the economy’s future and our economic stability.
“We’re grateful that we did not receive a double downgrade but we admonish the government to stick to their consolidation plan and to be religious about it because over the last four years they have disappointed not only the Bahamian people but rating agency’s as well,” Mr. Turnquest said.
Moody’s announced that The Bahamas was downgraded mainly because of the country’s “low medium-term growth” prospects and limited fiscal space compared to similar countries.