Statement from the Ministry of Finance on Standard & Poor’s Rating Service’s revision of The Bahamas’ outlook from stable to negative:

The outlook revision by Standard and Poor’s (S&P) from stable to negative while unfortunate is not unexpected.

As S&P clearly articulates in their statement, this administration inherited a deteriorating fiscal situation where the deficit target was overshot by a wide margin. This was in addition to the absence of a credible plan for deficit and debt reduction or taxation reform by the former Administration.

Over the last five years the deficit as a percentage gross domestic product (GDP) as measured by the government averaged four per cent; but as S&P rightly pointed out in their statement, it was actually higher if the sale of government assets were to be categorized as financing as opposed to revenue.

These deficits cumulatively represent a more than $1 billion increase in the national debt in five years.

The government recognizes the severity of the situation, which has been inherited, and has begun the process of fiscal consolidation, without ignoring the fragile social and economic state of the country.

As a result a number of initiatives have been or will be implemented within this fiscal year. These initiatives include:

• The introduction of White Paper on Tax Reform which would lead to the first major public discourse on the topic and to significant changes in the tax system
• The Introduction of a fiscally responsible Mortgage Relief Programme, which is a part of a broader initiative to restart the housing sector
• Revitalization of foreign investment interest in The Bahamas,
• Concrete steps to improve revenue administration and expenditure control

The government is confident that with these steps and other measures announced in the Budget Communication and the Charter for Governance, The Bahamas would be returned to a stable fiscal outlook and a healthy economy that benefits all Bahamians.