Here follows a press release from the Ministry of Finance regarding Moody’s rating action:

Moody’s investor service yesterday lowered The Bahamas government’s credit rating by one notch to Baa2, and issued a stable outlook for the credit assessment, premised on the strength of a very credible fiscal reform plan and a stronger forecast for economic growth.

It must be stressed that The Bahamas government’s credit rating remains at investment grade.

Moody’s notes that the rationale for the ratings change is the combination of factors that have led to deterioration of the government’s financial position and increased debt since 2007. The ratings agency rightly expresses confidence that the current programme of reforms to boost revenues, and to control expenditure and increase the efficiency of spending will yield positive results.

These reforms are indeed expected to have the intended outcome of reducing the deficit and supporting a “gradual reduction” in the government’s debt burden over the coming years. As Moody’s expectations underscore, on this course of action the Bahamian economy should strengthen, despite worries to the contrary in some quarters about the merits of the fiscal plan.

The government of The Bahamas must persevere with these reforms.