THE Bahamas has a “six month window” in which to stave off another credit rating downgrade through concrete fiscal reform actions, with Moody’s yesterday describing the Government’s planned $800 million correction as “enormous”.

Aaron Freedman, the Moody’s vice-president who led its recent Bahamas country report, described as “pretty drastic” the Christie administration’s goal of increasing revenues by a sum equivalent to 10 per cent of national gross domestic product (GDP).

He and his colleagues put the scale of the government’s proposed fiscal turnaround into context by telling The Tribune most countries sought revenue increases equal to two to three per cent of net GDP from fiscal reforms.

The Bahamas, though, is targeting a gross revenue increase up to five times that amount, with $500 million in new income adding to the estimated $300 million in existing import tariffs that it must replace.

Value-Added Tax (VAT) is projected to generate $500 million of that $800 million, or just over 60 per cent, but Mr Freedman said Moody’s was “sceptical” the new tax would meet the government’s forecast.

Unaware that the VAT legislation has yet to reach Parliament, until informed by this newspaper yesterday, Mr Freedman and his team said it was likely this would be “watered down” by public opposition to the new tax.

And, while acknowledging that the $2.6 billion Baha Mar project gave the Bahamas something no other Caribbean nation had, the Moody’s executive said its success was “a big if”.

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