A strong and clear debt management strategy needs to be highlighted by US rate hikes – Eye Witness News

Nassau, Bahamas-The recession in the United States “drags” the Bahamas, impacts tourism and slows the much-needed economic momentum, governance reformers said yesterday.

Hubert Edwards, Chairman of the Economic Development Committee of the Responsible Governance Organization (ORG) and Representative of Next Level Solutions, commented on the recent decision of the Federal Reserve to raise rates and its potential impact on the Bahamas. ..

He noted that the situation underscores the need for a very strong and clear debt management strategy.

Hubert Edwards, Head of the Organization for Responsible Governance (ORG) Economic Commission.

“”The sufficiency of projected funding costs, which is at least one of the risks identified in recent budgets, can deploy faster than it is beneficial to the Bahamas, “he said.

“The country needs some time to increase profitability before it can face a serious headwind. Recent actions by the Federal Reserve Board to raise interest rates by 0.75 percent have helped policy makers. It will raise significant concerns. Under normal circumstances, we are already facing a potentially high premium, and this change can have many negative consequences.

“The first stance is much more aggressive than originally expected, even a month ago, and given that this will be a post, local budgeting is a short-term’adjustment’to future funding costs. There is a possibility of pressing. “

He states: “It’s also worth noting the US politics of inflation. Action isn’t just limited to economics, it’s the actual positional pressure facing the Biden administration. All the major drivers of inflation are As we are still working, we need to anticipate a serious commitment to the fight, even at less powerful levels. This change raises borrowing costs and usually incurs emerging market debt. The investment climate can change by creating some appeal to the capital that may be targeted.

“With a total borrowing need of $ 1.8 billion, the Bahamas will need to remain very creative to keep down the cost of paying debt. Recent deals, including guarantees with IDB, have been adopted. It shows both the level of strategy (positive) and the degree of need for creativity (potential negative). “

Edwards said: “In a recent presentation, the market is much better than it was 10 months ago and we need to better understand the location of the country. If income forecasts are maintained early in the 2022/23 fiscal year, market access will be It should improve its position to reduce the expected deficit and increase the flexibility of the government in pursuing the final surplus.

According to Edwards, the likelihood that the United States will move into recession is increased by rate hikes and a more aggressive stance.

“Given the savings reported declines in the country, it will be important to manage this fight against inflation well,” he continued.

“Any recession will certainly drag the Bahamas widely, impact the early recovery of tourism and delay the very necessary momentum we are currently experiencing. The European Central Bank is at a lower level. However, it should be noted that it is likely to follow the Fed. This situation continues to emphasize the need for a very strong and clear debt management strategy. Debt stock management is the actual spending. And because it has a limited impact on both decision-making options, it remains one of the only most important determinants of a country’s success. “

Edwards said: The $ 564 million deficit financing and regular depreciation absorbs serious energy from Treasury experts.

“Growth is important to the success of the budget, and this development can plague it. Financing the shortfall is fundamental, so this development will bring what the budget currently envisions. It is hoped that no major changes will occur. “ A strong and clear debt management strategy needs to be highlighted by US rate hikes – Eye Witness News

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