Minister of State for Finance Michael Halkitis said yesterday despite the downgrade of the country's credit rating by Moody's Investors Services on Monday, he is "relieved", as there is still a "silver lining".
"As you recall, when Moody's issued a review, they put us on review and they indicated that it could be one or two notches," Halkitis said. "In all the circumstances, we are relieved that you know, we only went down one notch.
"It is important because we maintain our investment grade and the second positive aspect of this is that we get a stable rating which means that for the next 18 to 24 months, we should maintain this rating barring any unforeseen circumstances and it would give us an opportunity to address some of the issues they pointed out in their review."
Following a review in July, the ratings agency on Monday lowered the bond and issuer ratings of the government of The Bahamas one notch, to Baa3 from Baa2, despite the threat that they could have been lowered even more.
Low medium-term growth pointing to "weaker economic strength relative to similarly-rated peers", and the "persistent increase in the government's debt ratio leaves The Bahamas with less fiscal space relative to rating peers", said Moody's in explaining the downgrade.
Persistently high unemployment, non-performing loans in the banking system and a decrease in the competitiveness of the tourism sector, were reasons given for the "first driver" that led to the downgrade.
Moody's said it expects The Bahamas' economic performance over the next five years "will likely remain subdued and constrained by structural rigidities".
Noting that a downgrade is never a good thing, Halkitis said he wants to highlight the positive impacts it has.
"You never want to see a downgrade, but you know they have a formula and what happens is we are grouped within our rating... we are grouped amongst other countries and part of what they do is compare our numbers in terms of employment, economic growth and debt levels to those countries," he said.
"Whenever those statistics tend to fall outside of the range, they have to make an adjustment.
"So we're a little disappointed, but there is a silver lining, that we maintain our investment grade.
"The outlook is stable so it gives us time to continue our program of reform."
On Monday night, Prime Minister Perry Christie announced that the government and the Export-Import Bank of China signed an agreement that was approved by the Supreme Court that will see the stalled Baha Mar project completed, sold and opened before the end of 2016/2017 winter season.
Halkitis said the "good news" is important and could help the economy.
"It is very significant because you know we all heard the good news last night (Monday night) and so to the extent that it gets moving, it gets remobilized and it's opened, and we have people employed, it all contributes to the economy," the minister said.
"That and in conjunction with some of the developments going on in the other Family Islands, Exuma, Abaco and even Grand Bahama, when we see those become fully mobilized and gain some momentum we should see it add to the growth of the economy, employment, revenue and so it definitely brightens the picture for us."
The Ministry of Finance on Monday responded to the downgrade by admitting disappointment, but expressing confidence that the downgrade would be temporary, given Moody's stable outlook of the economy.
"The government's perspective on the Bahamian economy remains positive and its commitment undeterred in pursuing the necessary policy reform measures and initiatives to secure durable growth, accompanied by broadened employment opportunities and greater fiscal sustainability with debt reduction," the ministry said.
"To this end, the government is moving swiftly to advance the many real sector initiatives underway that are poised to deliver, over the near-term horizon, further concrete, measurable contributions in these key economic policy areas."
Jayme C. Pinder, Guardian Staff Reporter
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