BY CHESTER COOPER, EXUMAS AND RAGGED ISLAND MP, PLP Shadow Minister for Finance
We note that Moody’s credit ratings service has now downgraded our credit ratings several levels, firmly into junk territory. In fact, being downgraded two notches on the credit front, and being given a negative outlook is really a triple whammy.
This is the second major rating agency to downgrade The Bahamas this year, after S&P pushed us farther into junk territory. This is unfortunate for the country and for taxpayers, who will now have to pay more for debt servicing, but it is not totally unexpected. Moody’s warned in April when we were placed under review that we would be downgraded if they did not see a credible fiscal and economic policy response from the government.
They clearly did not.
This latest budget, as we noted, did not inspire confidence here at home, or in the world’s financial markets.
While we did experience the economic shock stemming from the coronavirus pandemic, it is clear that the response has not met the challenge before us. Its response to Dorian was similarly anemic and slow.
We see a pattern when it comes to this administration responding to crises.
We warned them to take progressive steps early to mitigate the fallout from COVID-19, but this administration did not.
We warned them about taking action quickly for filling financing needs, but this administration dithered.
Now, this action by Moody’s will make borrowing more difficult and more expensive. It is telling that Moody’s itself questions if the government will even be able to adequately fulfill its financing need.
We urge the government to assert the will to address some of the structural impediments to growth – inclusive of the cost of energy, the ease of doing business and a more robust regime to encourage FDI and stimulate domestic investments.
We must use this setback as an opportunity to press the reset button for a more progressive Bahamas.
As usual, the Progressive Liberal Party stands ready to assist.
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