Despite the economic fallout from Hurricane Dorian and the looming economic impact of coronavirus (COVID-19), the country maintained its BB+ sovereign credit rating by Standard and Poor’s (S&P), though its outlook was changed from stable to negative, according to a press statement released by the Ministry of Finance (MOF).
The statement revealed that the MOF anticipated the change in outlook given the negative economic effects caused by Dorian, but hailed S&P’s decision to leave the country’s credit rating unchanged.
Deputy Prime Minister and Minister of Finance Peter Turnquest said in the statement that the government’s fiscal reforms have again proven their worth and gave S&P confidence in the government’s economic recovery plan, especially “when hurricane damages are equivalent to one quarter of your annual economic output”.
“We are pleased to see that the government’s various fiscal reform efforts were acknowledged and commended in the report, as they have contributed to the country’s strengthening fiscal institutions and our capacity to deal with substantial external shocks,” said Turnquest.
“The assessment by S&P is not surprising given the conscientious adjustments we made to our original spending and borrowing plans so as to recover from the catastrophic impact of Hurricane Dorian. Although these deviations from our fiscal plan will not be permanent, we anticipated they would affect our outlook.”
Turnquest said S&P continues to be confident in The Bahamas’ economic position even as a global recession has been predicted and markets are teetering on the edge of a crash.
“Notably, even though the report foreshadows potential economic fallout from the coronavirus pandemic, S&P still expressed confidence in the checks and balances put in place to prevent further erosion of our creditworthiness,” said Turnquest.
“These include the government’s demonstrable increase in fiscal transparency and reporting and the focus and progress on institutional reform.”
Last year, credit rating agency Moody’s changed The Bahamas’ outlook to stable, and affirmed its Baa3 rating.