Press Release

Source: OPM Communications, Office of the Prime Minister, The Bahamas

Date: April 08, 2025

Contact: OPMcommunications@bahamas.gov.bs

Moody’s Ratings (Moody’s) has updated its outlook on the Government of The Bahamas’ rating to positive from stable and has affirmed the long-term issuer and senior unsecured ratings at ‘B1’. The ratings action reflects the agency’s positive view on The Bahamas’ ongoing fiscal consolidation efforts, which are expected to decrease borrowing requirements, support debt reduction and strengthen the country’s credit profile over time.

Regarding recent fiscal performance, Moody’s notes that The Bahamas “fiscal or financial strength, including its debt profile, has materially increased,” as the country “has demonstrated meaningful fiscal consolidation over the past two years, with the primary balance shifting to a surplus of 2.9% of GDP in fiscal 2024, from a deficit of 1.4% of GDP in fiscal 2022.” Positive performance is expected to continue, with the agency forecasting expanding primary surpluses at 4.5% of GDP for Fiscal Year 2025/26, driven by “higher revenue collection and discipline on the expenditure side.” Undergirding this are ongoing tax compliance efforts and additional revenue from the Qualified Domestic Minimum Top-Up Tax (“QDMTT”), which on its own is expected to increase total revenues by approximately 1% of GDP beginning in Fiscal Year 2025/26.

The improved fiscal position is expected to decrease gross financing needs and ease liquidity pressures, supported by proactive refinancing operations on the external market and bolstered by positive domestic market dynamics. On external refinancing operations, Moody’s pointed out that “efforts to improve the maturity profile of government debt – through measures such as conducting buybacks and refinancing maturing debt with longer-term debt – would demonstrate the government’s capacity to tap diverse external financing sources and would support the credit profile.” Domestically, “the banking system, which is the primary source of domestic financing, maintains ample liquidity, and has demonstrated a willingness to refinance maturing debt at relatively low borrowing costs.”

Regarding The Bahamas’ policy framework, Moody’s notes that the country’s “strong institutional framework and a stable political system,” as well as its “strong track record of policy predictability, transparency and sound macroeconomic policy” are supportive of The Bahamas’ credit profile. 

Looking ahead, Moody’s suggests that a ratings upgrade could materialize “if the government continues to demonstrate a track record of fiscal consolidation, leading to a sustained reduction in government debt and improvement in debt affordability.” Additional measures, such as the execution of buybacks or refinancing operations on external markets and the continued development of domestic markets, would also support an upgrade