Moody’s rating agency announced last week that it would maintain The Bahamas A3 credit rating, but would downgrade the jurisdiction’s economic outlook from “stable” to “negative,” in light of the global downturn and increasing government debt.

An official communique from the government announced that “the government of The Bahamas is pleased to learn that Moody’s has affirmed The Bahamas’ A3 bond ratings, which reaffirms the credit profile of the country. The government also acknowledges the rating agency’s revised outlook of the Bahamian economy from stable to negative.

“The recent global economic and financial crisis profoundly impacted the Bahamian economy and required extraordinary levels of spending on the part of the government to safeguard the financial system, boost economic activity and provide assistance to Bahamians badly in need of help in these trying times, this at a time when government revenue experienced precipitous declines. The unusually high rise in debt levels therefore was not surprising and in fact forecasted by the government in light of the worse global economic and financial crisis since The Great Depression. Despite this, we maintain in the circumstances a debt-to-GDP ratio that is one of the lowest in our region.”

The government’s 2011/12 budget pursued a fiscal policy that it maintains is designed to reduce the nation’s debt burden and foster an environment for economic growth.

“This government emphasizes our continuing goals to: (1) Reduce the level of deficit spending, as is proposed in the 2011/2012 fiscal budget relative to the crisis period; (2) Reduce the growth rate of the debt-to-GDP ratio as again is proposed in the current budget; and (3) Eventually decrease the debt-to-GDP levels in order to re-establish the fiscal space the country enjoyed prior to the onset of the crisis.”

Moody’s Corporation is the parent company of Moody’s Investors Service, which provides credit ratings and research covering debt instruments and securities, and Moody’s Analytics, which offers leading-edge software, advisory services and research for credit analysis, economic research and financial risk management.