Bahamas shuns austerity course

NASSAU — The government will not raise taxes or introduce austerity measures as a result of a credit rating downgrade by the international agency Moody’s, Minister of State for Finance Michael Halkitis said yesterday.

“We think we are not quite out of the woods in terms of the recession and the low growth, and we don’t want to run the risk of pushing the country back into a recession by increasing the level of taxes,” said Halkitis at the Ministry of Finance.

On Thursday, Moody’s downgraded the country’s credit rating from A3 to Baa1.

In addition, Moody’s said the country’s economic outlook remains negative.

“We see limited prospects for the fiscal consolidation necessary to strengthen the government’s balance sheet and stabilise debt levels,” said the Moody’s rating action.

Halkitis said the government has to do a better job of debt management and revenue growth.

Gov’t focus

He said the government will focus on gradually reducing expenditure, raising revenue and growing the economy.

“You would have made a mistake if you think you can go in and start to slash the budget because, inevitably due to the nature of our budget, that means you are sending people home and you’re stopping work,” Halkitis said.

“It’s counter productive. It means your economy stays in recession longer. We think the approach that we have adopted to take this multi-approach is the right approach and we promise we are going to be disciplined in implementing it and we are going to achieve results in the next few years.”

One of the factors that will influence future ratings are government corporations that operate at a loss, such as the Bahamas Electricity Corporation, Moody’s said. (Nassau Guardian)

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