A report from business news and financial data company Bloomberg lumps The Bahamas with the top ten most distressed emerging markets.
The report adds Ecuador, Kenya, Nigeria and Egypt to a list of distressed nations that includes Belarus, Ukraine, Maldives, Tajikistan, Pakistan and The Bahamas.
Responding to the report yesterday, Kwasi Thompson, East Grand Bahama member of Parliament and former minister of state for finance, contended that the government has not done enough since coming to power, and in its 2022/2023 budget, to plot a course toward fiscal consolidation and economic growth that would give investors confidence.
“The failure of the Progressive Liberal Party to engage in real governance and to make the tough but necessary decisions is eroding the credibility of this government among Bahamians and the international bond investor community,” said Thompson.
“The government must come to the Bahamian people with a legitimate plan for fiscal consolidation. The confidence of the investor community will not improve, and the government will find it more and more difficult to source the ongoing financing it needs to meet its obligations.
“The government must change course rapidly to avoid Bahamian taxpayers from footing the higher than necessary bill for their continued inaction.”
Thompson, in his statement, pointed to how poorly the country’s bonds have been trading on the international market. He explained in his statement that there seems to be “no confidence” in the international community concerning the government’s plans to move the country toward fiscal stability.
“The significant risk premium attached to The Bahamas’ bonds in the international bond market – which as of today was trading 32 percent below par value in the 2032 series – has been trending sharply downward over the last six months,” said Thompson.
“Despite the pronouncements of the Davis administration and their rosy economic and financial prognosis, the community of bond investors are heavily discounting the country’s bonds and as such, they are signaling in their actions that they have no confidence in the announced plans of the government to move the country toward fiscal stability.
“The opposition appreciates that the twin calamities of Dorian and the COVID-19 pandemic has meant that the country has had to undertake significant unplanned borrowings since 2020. These borrowings were approved unanimously by both sides in Parliament as a response to the two crises.”
Thompson said the Progressive Liberal Party administration has not presented a plan for expenditure restraint and revenue growth and that it has increased expenditure, ramping up spending in areas such as international travel and consultancies.