Government Not Surprised by Moody’s Threat of Downgrade Amid COVID-19 Pandemic
Finance Minister said government will adjust fiscal target ahead of its budget cycle
The government is calling the timing of the Moody’s review of the country’s economy “unfortunate” but “not surprising.”
In a press statement issued Friday afternoon, Ministry of Finance said “it acknowledges the decision by Moody’s to place The Bahamas’ Baa3 ratings on review for downgrade given the extreme strain placed on the recovering Bahamian economy by the spread of the coronavirus outbreak. This comes at a time when the entire world is going through economic turmoil. No country is being spared by the unprecedented public health and economic crisis,” the statement said.
The international credit rating agency projected that the Bahamian economy will contract by 8 percent this year and will subsequently put the country “under review” for a downgrade to “junk” status.
The ministry said, “The expected fall-off in government revenue and inevitable decline in GDP from the
global economic crisis and domestic economic shutdown would likely linger into the new fiscal and calendar year.
“These realities mean the Government is reviewing its fiscal targets once again, with a view towards revising them as part of the new budget cycle. Most importantly, the government’s comprehensive approach continues to be grounded in its commitment to fiscal responsibility,” the statement goes on to say.
Minister of Finance Peter Turnquest said “Despite the challenging times ahead and the need for significant fiscal adjustments, the government has demonstrated by its track record and strong commitment to fiscal responsibility, its ability to overcome economic hardship, restore fiscal stability, and to drive economic growth even in difficult circumstances.”
“As for The Bahamas, the Government is always mindful to secure the long-term fiscal stability of the country, mitigating any risks to our secure and prosperous future. During this crisis we will continue to conduct the nation’s fiscal affairs in a manner that is responsible,” he said.