Bahamian Government Gets Boost From Moody’s

  • Moody's has given the Bahamian Government’s fiscal consolidation campaign a major boost by predicting that this year’s fiscal deficit will only narrowly overshoot its target by $44Mn.
  • The credit rating agency forecast that improved revenues and “spending restraint” will contain the deficit for the 2023-2024 fiscal year to a sum equivalent to just 1.2% of economic output of gross domestic product (GDP). (The Bahamas' fiscal year runs during the period of July 1 to June 30, each year)
  • If Moody’s projection turns out to be accurate, the GFS (Government Finance Statistic) deficit will be only slightly higher than the $131Mn, or 0.9% of GDP, that the Davis administration targeted when unveiling its Budget last May. The rating agency’s latest deficit forecast, based on that Budget, is equal to $174.67Mn or a near $44Mn overshoot if it holds and comes true.
  • Moody’s also shrugged off the fact that the Government’s fiscal deficit was almost double the full-year target halfway through the 2023-2024 Budget year.
  • “According to data as of the first six months of the fiscal year 2023-2024, The Bahamas recorded a fiscal deficit equal to $258.7Mn or 1.9% of its GDP,” Moody’s said in its credit update. “Even though the deficit exceeded the target for the first six months of the fiscal year, there were signs of fiscal consolidation.”
  • “We expect improvement in revenue collection and continued restraint on spending will allow the Government to come close to the annual target of 0.9% of GDP. We forecast a slightly larger deficit in fiscal 2024, 1.2% of GDP, reflecting moderate slippage vis-à-vis the Government’s fiscal targets,” Moody’s noted.
  • The Davis administration will likely seize on Moody’s update as the first affirmation from an external source that it is close to achieving its projected fiscal targets, especially as the rating agency is forecasting it will achieve its long-cherished goal of moving from deficit to a Budget surplus equal to 0.5% of GDP (around $65.5Mn) in the upcoming 2024-2025 fiscal year.

(Sources: The Tribune & Moody’s Investor Services)