While an International Monetary Fund (IMF) debt restructuring program may make it easier for the government to make the tough decisions it needs to, it may not be as helpful in the long term, CFAL President Anthony Ferguson said yesterday.

He was asked about recently reported comments by Economist Marla Dukharan that The Bahamas would be one of the next regional nations to default on its sovereign debt.

“Personally, I would prefer us not to go through an IMF program because, quite frankly, for the most part, going through those programs are not helpful in the long term for any country,” he said when asked by Guardian Business if joining such a program would be all that bad for The Bahamas.

“However, what it would do for us is it would force us to make some of the real tough choices that politically is very difficult to do, but you can always blame it on the IMF causing us to do it.”

At the close of the fiscal year 2020/2021, The Bahamas’ debt had surpassed $10 billion – the highest in its history, and the fiscal deficit was $1.3 billion following three years of consistent borrowing in excess of $3 billion.

In its recent downgrade of The Bahamas to Ba3, sovereign ratings agency Moody’s noted that the sharp rise in debt over the past few years has resulted in a need for fast fiscal consolidation, without which would result in higher borrowing requirements and exacerbate funding risks.

“The fact of the matter is we mismanaged our borrowing in the last several years, where we continued to focus on borrowing foreign earning currency, to say we had a large reserve, where we should have been borrowing locally, where the need for an IMF program is not important,” Ferguson said of the country’s borrowing habits. 

“… You can always restructure your debt more easily locally than you can from an international perspective.

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