Sumner: Moody's should consider Baha Mar progress in next review

Mon, Aug 29th 2016, 02:43 PM


Edison Sumner

CEO of the Bahamas Chamber of Commerce and Employers' Confederation (BCCEC) Edison Sumner said it "only makes sense" for Moody's to take into consideration the recent announcement of remobilization at the Baha Mar Resort in its next assessment.

Sumner told Guardian Business that the ratings giant's recent downgrade of The Bahamas' credit sovereign rating from Baa2 to Baa3 shows that "we have quite a bit of work to do as a country to get ourselves in a place where it is not only seen but a reality that we are moving the economy in the right direction".

He asserted that while there are concerns about the downgrade, "we have to understand what was the road map to get us to this point".

The key drivers behind Moody's downgrade were prospects of low medium-term growth pointing to weaker economic strength relative to similarly-rated peers and the persistent increase in the government's debt ratio, which leaves The Bahamas with less fiscal space relative to rating peers.

Despite a downgrade in the credit rating, Moody's did change the economic outlook from negative to stable.
Sumner said although he is pleased by this, it is still "nothing to be proud about".

The chamber's executive said the government and the private sector in particular should be concerned about the decline in the country's credit ratings from the last several reviews by Moody's as well as Standard & Poor's.

"I think that the country has a significant amount of work to do. We would have to certainly work now to get ourselves out of this situation and to find ways to continue building the economy," Sumner said.

He reiterated that Moody's should never have taken Baha Mar as the "only thing" that could spur growth in the country.

"That was a mistake then and now," he said.

An agreement was announced last week by Prime Minister Perry Christie to sell the $3.5 billion Baha Mar mega resort once completed by the Export-Import Bank of China (CEXIM). But, Sumner said details are "too sketchy" to have a sensible discussion about the deal. He said, however, that he expects the announcement to be taken into consideration by Moody's since the agency has looked at Baha Mar in its analysis of the country's economy.

Last year, Moody's credit analysis noted that Baha Mar's delayed opening and protracted legal battle has "jeopardized" the anticipated economic growth of the country and raised concerns regarding future foreign direct investment.

Sumner said he could not say whether the next review by Moody's would be positive or negative.

"All I am saying is, if they took Baha Mar into consideration the first time, then they ought to take the new developments into consideration this time," he added.

Xian Smith, Guardian Business Reporter

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