The Tribune

By ROCHELLE DEAN

The Bahamas received a devastating blow at the end of 2016 with the downgrade to ‘junk bond’ status by the reputable credit rating agency Standard & Poor’s.

While those familiar with economics should not be shocked by this, for the average citizen this reality provoked feelings of fear, uncertainty and gloom for an already stagnant economy.

While this must be of major concern for all citizens who are stakeholders in the progress of the country, the leaders seem collectively united in everything other than the economic growth of the Bahamas, what exactly a ‘junk bond’ status rating signifies and how it affects all other matters of national concern. The Bahamas continues to spiral into a place of hopelessness or, to the optimist, a place of change. The country has experienced multi-dimensional poverty but must make the necessary reforms and corrective measures to boost the economy.

While Moody’s also downgraded the Bahamas with a stable outlook, the country is forced to accept the recurring trend in both ratings - which is down. The Baha Mar project was highlighted as the reason for some stability for the country, but this project continues to be plagued with setbacks and irrational decision making and does not incite growth.

With the ‘junk bond’ status relevant, the idea of a devalued dollar has been the topic of discussion for many Bahamians. The Bahamas must recognise that it must first have a substantial trade agreement or dominate a market of export in order for a devaluation of its currency to take effect and aid the country in its financial woes.

A floating exchange rate however will produce currency depreciation and the same effect, rendering a currency worth less than previously, but the country must also consider how the currency came to be valueless. They must now consider if it will concede to a self-imposed devaluation or a currency depreciation which highlights the country’s weak economic policies, chronic deficits and high rates of inflation.

The Bahamas must realise it is in crisis!

While this rings through the ears of Bahamians, the country has the opportunity to seek every measure for sustainable development by investing in key areas of export, as well as identifying other measures of poverty - outside Gross Domestic Product - to invest in its people. This will then give the government avenues to implement corrective economic policies.

Recently the United Nations development report revealed that the challenges faced by the Bahamas have contributed to a record rise in the poverty rate for the country, as well as the entire Caribbean collectively.

Poverty alleviation begins with seeing the treasure (change) within the junk!

• Rochelle R Dean is a Bahamian scholar, research fellow and peer-reviewer and a theory writer of economics presently completing a Bachelors of Science dual degree in economics and public administration with Liberty University, Lynchburg, Virginia. She is an Empower Women Global Champion for Change with UN Women. Comments to dean_rochelle@yahoo.com