Bahamas Government Welcomes Moody’s Positive Outlook

Introduction to Moody’s Report

NASSAU, Bahamas, CMC—The Bahamas government has welcomed the latest ratings from the US-based rating agency Moody’s, which elevated the country’s outlook from ‘stable’ to ‘positive’ while maintaining the credit rating at ‘B1’.

“For the first time in almost 20 years, an international credit ratings agency has given The Bahamas a positive outlook on our sovereign credit rating, signaling growing global confidence in the direction of our economy,” according to a statement issued by the Office of the Prime Minister.

Moody’s Analysis

Moody’s said that if sustained, the improvement in The Bahamas’ fiscal position will lower gross financing needs and ease liquidity risk. As the government’s net fiscal financing needs decline, it will gain greater financing flexibility to refinance maturity debt.

In its report, Moody’s said the positive outlook signals that the rating is unlikely to be downgraded in the near term.

“The outlook could return to stable if The Bahamas experiences setbacks in the effectiveness of its fiscal consolidation, resulting in a lasting deterioration of the primary balance and an upward trend in government debt.

“Factors such as lower-than-expected revenue collection, increased spending, or failure to implement planned tax reforms could weaken fiscal strength and increase gross financing needs. Also, heightened vulnerability to external shocks, particularly climate-related events, and reliance on commercial external financing with higher borrowing costs could exacerbate government liquidity risks,” Moody’s added.

Government’s Response

The Phillip Davis government said that when it took office in September 2021, the country faced some of the most challenging economic conditions in living memory.

“Our debt burden was high, government finances were stretched thin, and the country was still reeling from the combined effects of a global pandemic, Hurricane Dorian, and years of mismanagement.

“We committed to the Bahamian people that we would bring stability, restore credibility, and build a stronger, fairer economy. That meant making hard decisions and pursuing real reform—not just patchwork solutions, but long-term fixes.”

The statement by the international credit ratings agency recognizes the progress the country has made, adding, “They’ve acknowledged that our fiscal plan is working: debt is falling, the economy is growing, and we’re on track to reduce our debt-to-GDP ratio below 70 percent by 2028.

“They’ve taken note of our return to a budget surplus and our structural reforms to strengthen revenue and control spending. This is welcome news. It tells the world that The Bahamas is regaining its financial footing and that our work is credible and impactful.”

Energy Reform and Future Plans

The government said that a key part of that progress has been its decision to pursue energy reform. While it welcomes Moody’s report, the “news is a step forward, not a finish line.”

Prime Minister Davis is quoted in the statement as saying he knows Bahamians are still under pressure.

“The cost of living is too high. Too many are still looking for reliable opportunities. Some communities are still waiting for the basic services they deserve.

“That is why, even while we stabilize our finances, we are taking on the next big challenge: undertaking the largest energy reform in our country’s history. This includes major investments in renewable energy, modernizing outdated infrastructure, and reducing the cost and unreliability of power for Bahamian families and businesses.”

He said his government knows that no economy can thrive with high electricity bills and frequent blackouts.

“We are determined to fix this and fix it the right way. These reforms won’t happen overnight, but we are laying the foundation now so that future generations inherit a cleaner, cheaper, and more resilient energy system.

“This moment calls for balance. We must be disciplined in our finances, ambitious in our reforms, and compassionate in our leadership. We’ve come a long way. But we still have work to do, and we will not stop until progress is felt in every home, on every island, for every Bahamian,” Davis added.

Conclusion

The positive outlook from Moody’s is a significant milestone for The Bahamas, indicating growing global confidence in the country’s economy. The government’s commitment to fiscal consolidation, energy reform, and structural reforms has been recognized, and the country is on track to reduce its debt-to-GDP ratio and regain its financial footing.

Frequently Asked Questions (FAQs)

Q: What is Moody’s outlook on The Bahamas’ credit rating?

A: Moody’s has elevated The Bahamas’ outlook from ‘stable’ to ‘positive’ while maintaining the credit rating at ‘B1’.

Q: What are the key factors that contributed to the positive outlook?

A: The improvement in The Bahamas’ fiscal position, reduction in debt, and structural reforms to strengthen revenue and control spending.

Q: What are the government’s plans for energy reform?

A: The government is undertaking the largest energy reform in the country’s history, including major investments in renewable energy, modernizing outdated infrastructure, and reducing the cost and unreliability of power for Bahamian families and businesses.