By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ $11.843bn national debt at end-March 2022 has dropped below this nation’s economic output due to the continued post-COVID-rebound, resulting in a debt-to-GDP ratio of around 98.4 percent.

The Ministry of Finance’s public sector debt bulletin for the 2021-2022 fiscal year’s third quarter did not provide the ratio for the total national debt to economic output, only the Government’s smaller direct debt, with the latter now standing at $10.532bn or 87.5 percent thanks to the economy’s reflation following the pandemic.

“The combined debt stock of the central government, agencies and government business enterprises (GBEs)] was an estimated $11.843bn at end-March 2022, equating to a gain of $207m since end-December 2021 and $940.1m over end- March 2021,” the debt report said. “When exchange rate adjustments are applied, the total direct charge at end-March 2022 totaled $10.532bn or 87.5 percent of GDP, as compared to 101 percent of GDP at end-June 2021.

“Total foreign currency debt, at $5.351bn, constituted 45.2 percent of the debt stock at end-March 2022, exceeding the respective shares at both end-December 2021 (43.2 percent) and end-March 2021 (43.5 percent). Bahamian dollar indebtedness of $6.492bn represented 54.8 percent of the total to position below the 56.8 percent share at end-December 2021 and the 56.5 percent for end-March 2021.”

Senator Michael Halkitis, minister of economic affairs, recently said the Government was targeting a reduction in the foreign currency proportion of the national debt between 20-30 percent, down from the present 45 percent. However, the data indicates matters are moving in the opposite direction, potentially increasing the pressure on the Central Bank’s external reserves and The Bahamas’ export earnings to service foreign currency debt repayments.

“Growth in the debt stock between end-March 2022 and end-December 2021 was entirely associated with a $214.5m (2.1 percent) net gain in the central Government’ indebtedness. Conversely, outstanding debt of the agencies and GBEs maintained a net repayment position, posting a further decline of $7.5m (0.6 percent) in the March 2022 quarter,” the public debt report added.

It said the Government plans to smooth out “spikes” in debt repayments that have concentrated the return of Bahamian dollar-denominated payments this year and next. Some $1.281bn is due to mature between April and June 2022, and another $1bn next year, most - if not all- of which will likely have to be refinanced and rolled over.

“The debt redemption profile featured a spike in domestic debt in 2023, and in external repayments in 2024 and again between 2027 and 2032, reflecting the scheduled maturity of various international bond issues,” the public sector debt bulletin said.

“The Government intends to smooth out these spikes through appropriate liability management initiatives. For the review quarter, public debt service costs aggregated $925.6m, comprising $604.8m (65.3 percent) in Bahamian dollars and $320.8m (34.7 percent) in foreign currency.

“Of the $816.2m in principal payments, $528.5m (64.8 percent) was in Bahamian dollars and the remaining $287.7m (35.2 percent) in foreign currency. The latter was markedly increased over the December 2021 amount, because of the scheduled refinancing of a central Government loan facility. Overall interest costs of $109.4m comprised $76.3m (69.7 percent) in Bahamian dollars and $33.1m (30.3 percent) in foreign currency.”