UPDATE: The Ministry of Finance has released a statement on the news from Moody's. You can read it in full HERE
By RASHAD ROLLE
Tribune Staff Reporter
THE Bahamas has avoided a potentially damaging and costly credit downgrade, with Moody's revealing Friday that it has confirmed the country's Baa3 rating following its recent review.
However, the agency has adjusted the country's outlook from stable to negative.
The country’s credit rating now remains a notch above junk status.
Moody's cited the potential for "debt stabilisation" because of the government's fiscal consolidation programme as a reason for its decision.
It also considered that the country's credit metrics "remain in line with Baa3 peers" and the government's liquidity risk "remains contained”.
The negative outlook, however, "reflects potential downside risks to the fiscal consolidation process posed by weaker-than-expected growth, exposure to climate-related shocks in the form of hurricanes, and implementation risks associated with measures to rein in expenditure growth and enhance revenues," the agency said. "Absent successful fiscal consolidation the Bahamas' fiscal and credit profile would likely weaken."
The government's fiscal condition could further deteriorate as a result of contingent liabilities from state-owned enterprises and the Bank of the Bahamas, Moody's said.
Since its election in May, the Minnis Administration has focused much of its attention on trying to improve the country's fiscal condition after a Christie administration tenure it claimed was characterised by loose controls, overspending and over-employment in the public sector.
Key Free National Movement promises, like repealing Value Added Tax, have been placed on the back-burner while the administration pursues fiscal consolidation.
Last year, Standard & Poor's downgraded this country's credit rating to junk status.
After Moody's initiated a review of this country's credit rating following the Minnis Administration's revelations about the government's fiscal condition during the budget debate earlier this year, experts predicted it would be a huge challenge for the country to avoid another downgrade to junk status.