News Americas, New York, NY, October 3, 2024: The Bahamas is projected to see slower economic growth in 2024, according to a new report by rating agency Standard & Poor’s (S&P). The agency affirmed The Bahamas’ B+ long-term credit ratings with a stable outlook, noting that the country’s economic growth will decelerate to 1.8 percent next year before stabilizing in the following years.
S&P highlighted The Bahamas’ recent economic recovery, which has helped reduce the fiscal deficit and contain the national debt. However, the agency warned that significant short-term debt and refinancing risks remain, with nearly 25.9 percent of the nation’s debt maturing within the next year. S&P expressed confidence in the government’s ability to manage this debt, noting the domestic market’s liquidity could absorb it.
The report also acknowledged the impact of global economic conditions, specifically the expected slowdown in the U.S., which is The Bahamas’ main tourism market. Despite this, S&P believes that successful implementation of energy policy reforms could bolster medium-term growth. The government’s energy reforms, which include modernizing infrastructure and diversifying energy sources toward solar and natural gas, are expected to result in long-term savings and increased efficiency.
S&P reaffirmed its short-term sovereign credit rating of ‘B’ for The Bahamas, noting that ongoing fiscal consolidation efforts will likely prevent significant increases in debt. However, the agency cautioned that the rating could be lowered if the government reverses fiscal progress or if there is a sharp decline in per capita income. Conversely, the rating could be upgraded if public finance reforms, such as the introduction of corporate income tax and improvements in state-owned enterprises (SOEs), are implemented more swiftly than expected.
Tourism remains the cornerstone of The Bahamas’ economy, with total arrivals reaching 9.6 million in 2023, significantly surpassing pre-pandemic levels. The new cruise terminal in Nassau, which opened in May 2023, played a key role in boosting these numbers. S&P pointed out that the tourism sector will continue to drive growth, while other sectors like financial services and fintech present opportunities for future expansion.
The agency also noted that The Bahamas is well-positioned to tap into its blue economy, particularly through carbon credits generated by its extensive mangroves and seagrass beds. These natural assets could provide a new revenue stream in the medium term.
S&P expects The Bahamas’ net debt to fall to around 70.3 percent of GDP by the end of 2024, down from 80.9 percent in 2020, though interest payments are projected to remain high, exceeding 15 percent of government revenues for at least the next three years.
