The government has been having very successful meetings with its creditors, that include very transparent conversations about the status of the country’s economy, Press Secretary Clint Watson said yesterday, explaining that the government will show those creditors that the country will satisfy its financial obligations.
After being asked whether the government has been negotiating for lower interest rates due to the country’s downgrades from credit rating agencies Moody’s and Standard and Poor’s (S&P), Watson said it is not a regular practice to ask for reduced rates.
“What we’ve learned from talking to our financial advisors and experts here at the Ministry of Finance is it is not industry practice to ask lenders for reduced rates,” said Watson.
“Those are determined by the market and the lenders’ perception of the country.
“The accomplishment of a low interest rate via fiscal policies and being transparent with lenders of the government and through our policy responses, that’s how we get these preferred rates and that’s what we’re doing.
“We’re being very transparent with them, we’re following who we can follow to show them we are dedicated to our obligations and based on what’s happening in the country, and the market value, is how you determine lower rates rather than just making requests.”
Watson said meetings have been successful and creditors have been understanding because of the economic conditions brought about globally by the COVID-19 pandemic.
“We’ve been very open, frank and honest on where we are at and our commitment to own up to our obligations,” he said.
The Bahamas was downgraded for a second consecutive year by S&P this month to B+ from BB-. The agency gave a boon to the country’s financial prospects by moving the economic outlook from negative to stable.
Acknowledging the two large shocks to the economy in the past three years, notably Hurricane Dorian and the COVID-19 pandemic, S&P stated it believes the country’s track record of slow progress in reforming public finances and key sectors of the economy has contributed to the weakening of its financial profile over many years and hurt its economic performance.
The move follows Moody’s Investors Service downgrading The Bahamas’ long-term issuer and senior unsecured ratings to Ba3 from Ba2, while maintaining the negative outlook in September.
S&P recognized the economic recovery presently underway in the tourism sector will reduce pressure on government expenditures, support revenue as well as a gradual decline in deficits and support continued but decelerated growth in national debt over the next year.