The Bahamian government gives priority to reduction in the foreign debt ratio

• The Bahamian government is giving priority to reducing its foreign currency debt to 30% of total liabilities in a bid to reduce pressure on the currency peg and external reserves. The Government will increasingly look for domestic (Bahamian dollar) borrowing opportunities to finance its annual fiscal deficit and debt rollovers as it seeks to lower a foreign currency burden that currently accounts for 44.9% of its national debt. 
• Foreign currency borrowings are targeted at financing government’s capital expenditures, refinancing the global bond issuances, and achieving policy action reforms designed to promote private sector-led growth, secure improvements in the policy, legal, and institutional framework for state-owned entities, public-private partnerships, fiscal management, the business and investment climate, and build resilience to climate change, including emergency and disaster response. 
• To achieve this goal, the Government is planning to adopt a financing/borrowing strategy that reduces the risk associated with rising interest rates, and therefore debt servicing costs, by borrowing at fixed interest rates. It also plans to extend the time at which its various debt principal issues mature. 
• An increase in the foreign currency debt has led to unwelcomed side-effects being experienced in the Bahamas. Reducing its foreign debt would lead to improvement in the country’s capacity to invest in the future of its economy, by limiting the amount of revenue that goes to servicing these loans, thereby increasing long-term economic growth.

 (Source: The Tribune)