The Bahamian Gov’T ‘Reaching Ceiling’ On Debt

• The Government may be reaching its debt limits given that such liabilities are now bigger than the economy, the Debt Advisory Committee’s head warned yesterday. 
• James Smith, former minister of state for finance in the first Christie administration, told Tribune Business that The Bahamas’ current debt-to-GDP ratio of 100.4% is “not a comfortable place to be” as he prepares to advise the Government on how to manage and reduce its $10.356bn stockpile of liabilities. 
• “We might be reaching our ceiling when we have debt at the level of GDP. It’s not a comfortable place to be,” he conceded. “It’s the quantum of the debt and the tenor of the debt that we have to look at, and the way forward would be to manage the debt by setting some objectives, but we wouldn’t know that until we get the committee formed and get a fully comprehensive background on it.” 
• While the economy’s rebound will increase output and gross domestic product (GDP), thereby likely taking the debt ratio back below 100 percent, this will likely remain elevated in the high 80 percent to 90 percent-plus range for some time to come given the blow-out produced by Hurricane Dorian and COVID-19 that further accelerated The Bahamas’ fiscal deterioration.

(Source: The Tribune)