International credit ratings agency Standard & Poor’s on Monday downgraded The Bahamas’ sovereign credit rating for the second time in two years.
The Bahamas’ downgrade from a long-term credit rating of BBB+ to BBB came after S&P recently revised the way it evaluates sovereign ratings, placing heavier weight on “economic diversity” and “growth prospects”.
S&P said the country’s dependence on tourism, particularly from the United States, was a major factor in the downgrade.
“Tourism accounts for more than 50 percent of GDP (gross domestic product) and employs more than 50 percent of labour force and one geographic market (US tourists account for more than 80 percent of the total),” S&P said in a report.
The Bahamas’ short-term credit rating was also downgraded from A-2 to A-3 on Monday.
The Ministry of Finance responded to the ratings downgrade by claiming that the move “seemed likely” following the agency’s change in evaluation methods.
“This notwithstanding, the government of The Bahamas remains focused on stimulating economic growth through inward direct foreign investment, increasing support for small and medium size business development, improving the domestic environment for doing business and strengthening the productivity of The Bahamas’ workforce,” said the ministry in a statement.
The government said it also remains focused on strategies to reverse the growth rate of the country’s debt-to-GDP ratio and return it to more sustainable levels.
“We will continue to focus on these in order to create optimum opportunities for the citizens of The Bahamas to be employed, to increase their income generating capacity and pursue their business interests,” the ministry said.
The Bahamas’ credit rating now sits just two notches away from the non-investment grade level — where the ability of a country to pay back its debt becomes speculative.
The country’s credit rating was downgraded from A- to BBB+ in December 2009.
Another international credit ratings agency, Moody’s, downgraded the country’s economic outlook from stable to negative in August.
Source-Nassau Guardian
