Scotiabank (Bahamas) Limited Managing Director Kevin Teslyk said The Bahamas needs its medium to long-term revenues to "exceed and outpace" expenses in order to ensure sustainability.
The banking executive's comments to Guardian Business come after Moody's Investors Service pointed out in one of its economic outlooks that three bond restructurings totaling $9.7 billion in the Caribbean this year are failing to ignite economic growth and may not help the region avoid more defaults.
"I think the overarching view is that whether you are an individual consumer, small business, corporate commercial enterprise or a sovereign government one needs to live within your means. You need to ensure sustainability in the medium to long-term and revenues exceed and outpace expenses," he said.
According to the Moody's report, the average debt for a Caribbean nation compared to the size of its economy stands at 70 percent.
Teslyk noted The Bahamas' debt to gross domestic product (GDP) ratios are quite a bit less at approximately 50 percent and is mostly local currency debt as opposed to foreign currency debt, unlike other countries in the region.
"It is nowhere near the same level. Most of the government's debt, between 77 and 80 percent, is in fact local currency debt so that we don't have the same implications as you have in making payments to foreign investors and the potential for foreign defaults. The Bahamas and some other countries in our region like Barbados for example have relatively small foreign currency debt loads," he explained.
"There are other countries in the region that have debt to GDPs that are already in excess of 100 percent. Jamaica was listed as being one of those as well as Grenada and Antigua and Barbuda."
He also pointed out to Guardian Business that the country incurred hefty expenses within the last five years due to major infrastructure works taking place mostly in New Providence.
"You are always going to have those times of growth and redevelopment or investment in infrastructure, which has very much been the case in The Bahamas with the airport development, the New Providence Road Improvement Project (NPRIP), the Baha Mar project amongst others which are large, one-time investments that will always mean that the expenses in the short-term are going to outpace the revenues. Those have to be the exceptions and not the norms," Teslyk revealed.
He further added that The Bahamas' market is very liquid, as there has been more of an emphasis on saving than spending.
"The local industry here in The Bahamas as everyone knows is very liquid. There's lots of surplus liquidity with businesses among the banks. We're in savings mode as opposed to spending mode so those liquidity levels are likely going to increase so in terms of funds to finance government's ongoing business, they've got the ability to rather easily finance debt loads through the local marketplace, which doesn't fit the same degree of challenges or strain on a country as foreign debt loads do," Teslyk confirmed.
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