Government will meet with international credit ratings agency Standard and Poor’s (S&P) today, Deputy Prime Minister Peter Turnquest confirmed yesterday. The country’s future rating hinges on this meeting between S&P and the Free National Movement (FNM) government.
Last year S&P delivered a blow to The Bahamas, dropping its investment rating to junk status due to a number of factors, one of which was the stalled opening of Baha Mar and the missed opportunity for thousands of jobs. Baha Mar is partially open and will be fully open by the beginning of the second quarter of 2018. S&P, because of the progress made on Baha Mar, elevated the country’s outlook from negative to stable.
The stable outlook hinged on the success of a restarted Baha Mar project, as well as smaller tourism developments and the country’s steady stream of tourists.
But S&P threatened to further lower the country’s rating over the next two years if public finances continued to “deteriorate”.
Both S&P and fellow credit ratings agency Moody’s have their eyes on the country’s national debt and projected deficit.
Opposition Leader Philip Brave Davis released a statement yesterday stating that the government’s calculations on the deficit have fluctuated since the pronouncement made during debate on the national budget.
“Considering the knee jerk actions of the Ministry of Finance since May 2017 and the many confusing, misleading and contradictory statements by the minister of finance and the acting financial secretary to date, the Progressive Liberal Party has grave concerns with regards to the upcoming consultations and the outcome of the review process,” Davis said in his statement.
Prime Minister Dr. Hubert Minnis, who was leader of the opposition last year when the downgrade occurred, said then that the downgrade of The Bahamas’ credit rating to junk status by S&P is the “disastrous consequence” of the Progressive Liberal Party’s inept governance and policies.
S&P, the world’s largest credit ratings agency, downgraded the country’s sovereign credit rating to sub-investment grade level, dropping the credit rating by one notch to “BB+/B”, from “BBB-/A-3”.
Davis said his party is concerned about “the flippant dismissal” of more than 30 contract workers from the “Central Revenue Agency last week”, which he suspects could be looked at unfavorably by S&P because the employees “were assigned to and working on various revenue enhancement projects and have been extremely successful in increasing government revenues and collecting much elusive and long outstanding government taxes”.
Government recently secured money to refinance and “term-out” several U.S. dollar bank loan facilities ($450 million) and domestic treasury bills and bank advances ($300 million).
Speaking with Guardian Business recently, Turnquest said the government’s message to S&P will be the “same” message that was provided to Moody’s and the International Monetary Fund – institutions which have already visited The Bahamas for their annual reviews.
He explained that the message would surround discussions about growth estimates, fiscal responsibility initiatives being worked on and the government’s overall fiscal consolidation plan.
Davis said there seems to be no clear plan from the government “as to where we are going in terms of revenue collection and financial management”.