Moody's Investors Service today downgraded its sovereign credit rating for The Bahamas by one notch to Baa1, citing limited economic growth prospects. The credit outlook remains negative, but the rating is still within investment grade.

Moody’s pointed out that the economy contracted at an average rate of 0.8 per cent annually between 2007 and 2011 and it expects the post-crisis recovery to remain fragile. The Government’s fiscal stimulus programme is yet to yield growth dividends and unemployment remains high, depressing domestic demand, according to the rating agency.

The Bahamas Government has pledged to unveil a strategy to address “the fiscal imbalance” in its Mid-Term Budget Statement, reinforcing its commitments to get the public finances back on a sustainable path.

Moody's Investors Service is a leading provider of credit ratings, research, and risk analysis. The firm's ratings and analysis track debt covering more than 110 countries, 11,000 corporate issuers, 22,000 public finance issuers, and 94,000 structured finance obligations.