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Bahamas: Moody’s Boost For Gov’ts ‘Credibility’

Moody’s yesterday delivered a major boost for the Government by hailing the launch of its quarterly fiscal reports as a move that will help regain lost “policy credibility”.

The international credit rating agency, in an update to the capital markets, said such enhanced fiscal transparency and performance reporting will help restore confidence among global investors who were rattled by the Minnis administration’s recent revelation of $760m in unfunded spending arrears.

It also praised the Government’s “timeliness” in releasing the data within four weeks of the 2018-2019 fiscal first quarter’s September end, adding that this will enable “better understanding” of the reasons for any “deviation” from Budget projections.

Moody’s, though, warned that it was “particularly important” for the Government to deliver on its promises of switching the public sector to accrual-based accounting by 2022, a method that should provide a more accurate picture of its financial position because – unlike the existing cash-based system – it will account for spending commitments when they are made, not when funds are released.

Describing the introduction of quarterly reporting as “a step forward” in returning the Government’s finances to a sustainable path, through the elimination of $300m-plus annual deficits and reducing the $8bn national debt, Moody’s said it would prevent the recent “shocks” caused by The Bahamas consistently missing fiscal projections by a wide margin.

“The Bahamas’ fiscal framework has faced challenges in recent years given large revisions to fiscal outcomes that contributed to missed deficit targets and the uncovering of large arrears,” Moody’s said.

“Over the past few years, fiscal deficit outcomes tended to be revised after being presented in mid-year budget updates or budget speeches, which points to issues regarding fiscal data transparency and quality.

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