The Bahamas is scoring early wins in its debt management journey as it targets more fiscal space for national priorities and growth.
When a nation repeatedly borrows above its means, its citizens ultimately pay the price. The country’s living standards and future plans could be largely dedicated to debt repayment. Debt management is the antidote to debt mismanagement; it promotes macroeconomic stability, frees up funds for health, social services and education.
In a meeting with the UNDP Jamaica held at the Ministry of Finance in Nassau to review the progress made under the project, Simon Wilson, the ministry’s Financial Secretary and Wendy Craigg, Consultant at the Ministry of Finance and a former Governor of the Central Bank of The Bahamas, discussed hypothetical scenarios to the pitfalls of debt traps and the liberating impacts of debt management.
Joining the expert panel are Christine Thompson, Deputy Director in the finance ministry, and Sanjay Kumar, Debt Management Adviser at the Commonwealth Secretariat and the project’s manager, who joined via Zoom from London.
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The four experts are part of the team spearheading a modern and strategic approach to the management of national debt in The Bahamas. This includes establishing the legal, regulatory and institutional frameworks, strategic plans and bond market development that will define a new era in public debt management in The Bahamas.
A robust and comprehensive approach to debt management
Prior to 2020, arrangements for debt management in The Bahamas were scattered among several laws dating back to the 1970s and 1980s. Currently, they are being replaced with robust institutional and regulatory frameworks, under a project financed by the India-UN Partnership Development Fund and implemented by the Commonwealth Secretariat in partnership with the United Nations Development Programme (UNDP).
The Commonwealth Secretariat is implementing a project entitled ‘Strengthening Public Debt Management Framework and Developing Government Bond Market in The Bahamas’ The project is funded by the India UN Partnership Development Fund in collaboration with the UNDP.
The project commenced on 1 July 2020 and is expected to end in June 2024. The Secretariat, after discussions with the UNDP and the Government of The Bahamas, is considering extending the project until June 2024.
The legislative framework is set
A key project milestone – a Public Debt Management Act passed by Parliament in March 2021 – sets an important foundation and one that will be further updated under the leadership of the Government. This will help to strengthen the legal underpinnings of this new dispensation. It provides a foundation for the institutional reforms designed to promote transparency, accountability and efficiency in debt management operations.
Building credibility for investors and credit agencies
Other key project deliverables complementing the debt management framework are the formulation and tabling in Parliament of The Bahamas’ first and second Medium Term Debt Management Strategies; the development of the first and second Annual Borrowing Plans; and publication of the first set of quarterly Public Debt Bulletins.
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In this new dispensation, the Government must report on its debt and annual debt borrowing plans to Parliament, and to the public, to bolster transparency, oversight and accountability.
Project milestones are being achieved
UNDP Resident Representative Denise E Antonio commended the Government of The Bahamas for their commitment to prudent fiscal management and for consistently strengthening their debt management frameworks to be fit for purpose and relevant to the national context.
She noted that debt management remains an important mitigating factor in financial resilience and poverty reduction. To this end, she reiterated UNDP’s continuing support for the nation’s visionary programme.
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Senior Director for Economic, Youth and Sustainable Development at the Commonwealth Secretariat, Ruth Kattumuri said,
"We have been very happy to be able to support the Government of The Bahamas through this project and the Secretariat applauds the government for the tremendous progress that they have made.
She continued “We are encouraged by the significant milestones that the project has already begun to achieve. We know these measures will benefit The Bahamas, and her citizens, for decades ahead. Debt management is critical to providing resilience and macroeconomic stability to allow for growth initiatives. We look forward to our continued partnership with The Bahamas and the UNDP."
A growing appreciation for the need for debt management globally
Thankfully the tide of prudent debt management is rising globally. More countries are strengthening their debt management strategies to create bulwarks against financial crisis and enable platforms for growth.
As such, the global debt-to-GDP ratio is declining, falling to about 353% of GDP in the second quarter of 2021, according to an Institute of International Finance (IIF) report.
Falling debt-to-GDP ratio in The Bahamas
The Bahamas’ debt is on a similar trajectory, falling to 90.66% of GDP in 2022 and a further four percent to 86.61% in 2023. The nation is targeting a debt-to-GDP ratio of 65 per cent by the 2026/2027 fiscal year and is well on its way to achieving these targets.
About the Commonwealth Public Debt Management Programme
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Media contact
- Amy Coles Communications Officer, Communications Division, Commonwealth Secretariat
