News Americas, New York, NY, October 3, 2024: The Bahamas is projected to see slower economic growth in 2024, according to a new report from rating agency Standard & Poor’s (S&P). The agency affirmed the Bahamas’ long-term B+ credit ratings with a stable outlook, noting that the country’s economic growth will slow to 1.8 percent next year before stabilizing in the years ahead.
S&P highlighted the Bahamas’ recent economic recovery, which has helped reduce the fiscal deficit and rein in the national debt. However, the agency warned that significant near-term debt and refinancing risks remain, with nearly 25.9 percent of the country’s debt maturing within the next year. S&P expressed confidence in the government’s ability to manage this debt, noting that domestic market liquidity could absorb it.
The report also acknowledged the impact of global economic conditions, particularly the expected slowdown in the US, which is the Bahamas’ main tourism market. Despite this, S&P believes that the successful implementation of energy policy reforms could boost 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 “B” sovereign credit rating for the Bahamas, noting that continued fiscal consolidation efforts are likely to prevent significant debt growth. However, the agency warned 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 improve if public finance reforms, such as the introduction of corporate income tax and improvements to state-owned enterprises (SOEs), are implemented faster than expected.
Tourism remains the cornerstone of the Bahamas economy, with total revenues expected to reach 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 increasing these numbers. S&P noted that the tourism sector will continue to drive growth, while other sectors such as 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 about 70.3 percent of GDP by the end of 2024, from 80.9 percent in 2020, although interest payments are expected to remain high, exceeding 15 percent of government revenue to at least the next three years.
