STATEMENT BY CHESTER COOPER, PLP DEPUTY LEADER, SHADOW FINANCE MINISTER – RESPONSE TO S&P DOWNGRADE

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Chester Cooper MP for Exuma and Ragged Island

We note the S&P Global rating report downgrading The Bahamas once again.

I have long held the belief that downgrades should not be weaponized for political purposes.

However, the fact that Standard & Poor’s gave a damning assessment of this administration’s handling of the economy throughout the pandemic is inescapable.

Yes, every country has been impacted by COVID-19, particularly tourism-dependent nations.
But what remains clear is that this administration has inflicted unnecessary self-harm on the economy through haphazard, half-baked policies that have made the situation worse.
S&P says it is worse than anticipated from when they made their assessment in April.

If they are basing a 21 percent GDP decline on tourism figures up to July, I shudder to think what the assessment would be when we look at tourism figures from July through the end of November, when the government effectively closed our stopover tourism market.

We are in very troubled waters.

S&P not only downgraded the sovereign credit rating from BB to BB-, but also maintained its negative outlook.

The fundamentals suggest that we were heading in this direction even in the pre-pandemic environment.

The anemic response to Hurricane Dorian recovery was not helpful either.
This rating adjustment will continue to weaken our position and our ability to find much needed funding at reasonable rates.

In his response, the minister of finance noted that in the absence of signs of a vigorous recovery being manifested by the second quarter of the current fiscal year, further action would be taken.

Whilst there is a lot of focus by S&P for fiscal and structural reforms, the reality is that we need absolute focus on economic growth.

Given the limited toolbox options, fiscal reforms in the vein of increasing taxes atop the 60 percent increase in VAT and/or cutting the civil service and further scaling back of capital investment will likely cause more pain and further economic contraction.

Since 2017, I have become a scratched record calling for focus on economic growth.

I renew this call today.

The negative outlook cited by S&P appears driven by the absence of a credible recovery plan.

Unfortunately, the Economic Recovery Committee’s Summary Report was a disappointment after waiting eight months for its delivery.
It clearly did not convince S&P that it is a viable roadmap for short and medium-term recovery of our economy.

It is apparent from S&P’s report and the minister’s response, that no clear, viable plan has been presented.

We must all wake up each day thinking of ways to grow the economy, focusing not only on tourism. What we need is innovative, out of the box thinking.

A review and analysis of many of our regional peers would show that The Bahamas has a greater frequency of adverse rating actions since 2017 and during this pandemic.

This speaks to the need for a National Development Plan type focus on building a resilient economy.

We renew our call for the Fiscal Responsibility Council’s report that would examine government reports and reasonableness of projections.

While we do not need S&P to tell us that we are in deep economic trouble, it sadly lays bare the dire straits we are in, the damaging government response to the pandemic and the lack of a clear strategy to guide us moving forward.

The Progressive Liberal Party remains available to assist.