Government hopes to retire some $300 million it will soon owe in maturing bonds, Minister of Economic Affairs Michael Halkitis said yesterday, adding that the there are plans in place to handle a number of other large payouts the government will owe in the near-term.

"We have a plan," Halkitis said.

"We have various resources put aside.

"We look to retire that ahead of when it comes due."

Recent reports on the Bahamian economy, including those from credit rating agencies Moody's and Standard and Poor's, have focused on the debt obligation of the government given the high cost associated with it.

The $300 million comes due early next year.

Noted Caribbean Economist Marla Dukharan mentioned the bond in her most recent Caribbean Monthly report.

"Government noted that refinancing for the USD $300 million bond due January 2024 is expected to be sourced on the international market 'underpinned by multilateral credit enhancements as well as direct multilateral lending'."

Halkitis said after 2024 there are a number of costly repayments that will have to be made by the government every two years or so.

"... We are aware of that, and we have plans in place so that as these rollovers come due, we have the ability to do it," he said.

"So we are aware and we have the plans in place, which include putting aside money into sinking funds."

Moody's noted in its most recent report the need for The Bahamas to put itself in a position once again to receive favorable rates in the bond markets, though the country expects to do much less foreign currency borrowing this fiscal year than in previous years.

"The government expects to limit its need to access international bond markets, instead relying on multilateral funding and external loans to meet its gross external financing needs," Moody's said.

"Most of the government's $876 million in external repayments are due to commercial creditors, $300 million to bondholders and an additional $373 million due on commercial loans.

"The annual borrowing plan identifies $210 million in funding from international financial institutions in the form of policy loans.

"The government also intends to use partial credit guarantees from multilateral institutions to attract financing from commercial banks on more favorable terms than without a partial guarantee.

"In 2022, the government raised funding through a bond issuance, which includes a guarantee from the Inter-American Development Bank.

"A narrowing fiscal deficit, which can be financed through domestic sources, provides the government with financing flexibility to meet its upcoming external amortizations. The government has established a sinking fund, with around $300 million based on budgeted contributions in fiscal 2023 and around $260 million as of June 2022, to retire maturing external debt."

The credit rating agency said the country's ability to attract financing through multilateral agencies will be key to future external amortizations.

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