Former Finance State Minister and Central Bank Governor James Smith projected the economy will turn around in the near future, with the “resuscitation” of the multi-billion dollar Baha Mar Resort’s opening.

According to Mr. Smith, the stalled state of Baha Mar over the past year has contributed significantly to the stunted growth of the economy, which was between zero and one percent over the last year.

“It is because of that failure to open, that really created, or can be part of the explanation for the slow growth. We have the global slowdown obviously, the problems with practically every sector. The expectations were that Baha Mar would have been a major sort of thrust forward for the economy and when that started to go south, so did the economy and all of the macro indicators- employment growth, and those related parties,” Mr. Smith explained.

Moody’s recently downgraded The Bahamas from a baa2 to baa3 status, following two consecutive years of recession.

Mr. Smith told The Bahama Journal he has no issue with the credit rating agency’s analysis, but he explained that his difficulty would have come if Moody’s had moved The Bahamas down two notches to junk status.

“We are far from that. We may not have had really encouraging broad economic data, like debt to GDP ratios or high unemployment and that sort of thing; but we are not in a position where had the debt become where we were unable to pay it,” he said.

“We can do any number of things that are somewhat draconian. We can actually reduce the size of the labour force, your payroll, you can stop certain capital projects, as long as you regard the payment of your debt as a serious matter and it is. You can also sell assets if you had to. The Bahamas government still owns many things including 50 percent in BTC, a company that makes $40 million a year. And if you use a rule of thumb, say 10 times the earnings, that in itself translates into several hundred million dollars.”

“I’m only saying that there are a number of options open to a government before you reach the stage you cannot pay. And that is my argument that Moody’s cannot place The Bahamas at this stage in that category,” Mr. Smith reiterated.

Mr. Smith’s sentiments are in line with what Finance State Minister Michael Halkitis said immediately following the Moody’s downgrade.

“It is important because we maintain our investment grade; and the second positive aspect of this is that we get a stable rating which that means for the next 18 to 24 months, we should maintain this rating barring any unforeseen circumstances and it would give us an opportunity to address some of the issues they pointed out in the review,” Mr. Halkitis said.