Moody’s downgrade threat will force the Government “to come clean”, the DNA’s leader said yesterday, and be more accountable and transparent than it has been with the Bahamian people on the nation’s fiscal crisis.

Branville McCartney told Tribune Business that the credit rating agency would not fall for “the waffle” typically employed by Prime Minister Perry Christie in assessing whether a downgrade of this nation’s creditworthiness - possibly to ‘junk’ status- is justified.

He emphasised that the Government’s economic growth and fiscal policies were “on trial” as a result of Moody’s warning that a downgrade might come by August, and warned it was going to be “very, very difficult” for the Bahamas to escape such action.

“Whatever they told Moody’s will have to be contrary to what they told the Bahamian people,” Mr McCartney told Tribune Business.

“They told the Bahamian people this economy was rebounding, in essence. They told the Bahamian people there are investments going on in this country that will put the Bahamian people back to work. They told the Bahamian people that when VAT was introduced, the debt will be reduced, and we will be looking good on the international stage financially.”

Arguing that little to any of this list had been fulfilled, Mr McCartney added: “They initially said the monies from VAT, when they were trying to sell it to the Bahamian people, were needed to reduce our debt.

“A year after VAT was introduced, they said the money will go into the Consolidated Fund, which means taking that money and using it any way they wish, not for what they agreed to.”

The Government, in setting out its strategy for combating any downgrade, said on Monday that 77 cents out of every $1 in new revenue collected since 2013 had been applied to debt servicing.

This, though, both illustrates the size of the debt problem, and raises questions about whether the VAT monies are being applied to the national debt or used to finance new social and spending programmes.

The Christie administration has also pointed to the Bahamas’ favourable maturity profile, with debt issue redemptions spread out over the medium and long-term, and the fact that the majority of its debt - 76 per cent - is denominated in Bahamian currency and held locally,

But Moody’s decision to place the Bahamas on review for a possible sovereign rating downgrade was sparked by the revelation of Department of Statistics data showing that the country had experienced two successive years of contraction and recession, and not positive growth as all had projected.

It also expressed concern at the continued rise, albeit at a slower rate, of the $6.6 billion national debt despite the arrival of VAT.

“The Minister of State for Finance [Michael Halkitis] is going to have to explain to these international agencies why they have not been accountable and transparent with the Bahamian people in the management of the financial affairs of this country,” Mr McCartney said.

“I think they’ve been put in a position where, in order to save us from a downgrade, they’re going to have to speak to the international community and, by them doing that, they’ve been placed in a situation where they have to be accountable, more so than what they’ve done with the Bahamian people.

“The only thing that the PLP can say is they must tell the truth as to where we are as a country,” the DNA leader added.

“They cannot waffle their way out, as they did with the presentation of this Budget. They cannot do as the Prime Minister does every time he goes to Parliament, and waffles and says things are going to be dead good.”

The Government will have to convince Moody’s that everything it is promising to deliver, by way of policy initiatives and reforms, will come good and both revive the Bahamas’ GDP growth rate and drive fiscal consolidation that meets its targets.

Increased pressure for results will likely be applied to Baha Mar’s receivers, who appear to be closing on an agreement to resume the stalled $3.5 billion project’s construction, plus the selection of a preferred bidder, but are not quite there yet.

While it has embarked on energy and labour reform initiatives, and addressing the Bahamian economy’s other structural challenges, these remain a long way from delivering the promised improvements.

And many of the new foreign direct investment (FDI) projects touted by the Christie administration, such as Mediterranean Shipping Company’s (MSC) Ocean Cay development, and the Children’s Bay/William’s Cay project in the Exumas, have yet to reach ‘shovel in the ground’ status.

“The Government is going to have to come clean with where we are with regards to our finances, our fiscal dilemma in this country,” Mr McCartney told Tribune Business.

“We can’t employ any more waffle. It’s closing in on them at the end of the day. Moody’s and Standard & Poor’s have all this information, all that the Government said they are going to do, and what they’ve not done, over the last four years.

“What a shame. It’s very scary. I was at a meeting this morning with a couple of business people, and one or two foreigners, and they were rubbing their heads: How could this country get to the stage it’s at when there’s so many possibilities?” Mr McCartney added.

“They were businessmen wanting to do business here, and they were asking how a country this substantial, and with so much potential, came to this stage.”