Fitch, the American credit ratings agency, has assigned The Bahamas an inaugural Long-Term Foreign-Currency Issuer Default Rating (IDR) of ‘BB-’ with a Stable Outlook, just days after Moody’s revised the country’s sovereign credit rating outlook to “positive” from “stable.”
According to a statement from the Ministry of Finance, Fitch’s decision reflects the country’s strong GDP per capita, robust governance, and ongoing fiscal consolidation efforts.
Fitch anticipates continued strong performance from the tourism sector, driving real GDP growth above pre-pandemic levels through 2026. The agency also highlighted the country’s economic buffers, including insurance and contingency funds, as well as the financial sector’s substantial external liquidity, which contribute to the country’s growing economic resilience.
In its assessment of fiscal performance, Fitch noted significant improvements, with strong revenue growth leading to a declining fiscal deficit. The deficit is expected to remain low at 0.5 percent of GDP in FY 2024/25. Debt-to-GDP has also improved, dropping to 81.5 percent in FY 2023/24 from a peak of 99 percent in FY 2019/20. Fitch projects further reductions, with debt-to-GDP expected to reach 77.7 percent by FY 2025/26, and commended the government’s target of reducing debt to 50 percent by FY 2030/31.
However, the ‘BB-’ rating still places The Bahamas in the “junk” category, meaning that while the country’s credit outlook has improved, there are still risks that investors consider, especially in the face of potential economic challenges.
