US-based rating agency Moody's says the Bahamian government's fiscal consolidation projections face multiple risks due to the absence of tax increases in the national budget which was unveiled on Wednesday.
Prime Minister Phillip Davis presented a multi-billion dollar tax free budget as the country begins to rebound from the impact of the covid-19 pandemic.
But Moody's says while the narrowing fiscal deficit was declared to be a credit positive for The Bahamas, it noted over-optimistic revenue projections in the absence of a wider tax base and difficulties in controlling government spending in line with targets.
It warned that this represent real threats to bringing the US$10.5 billion national debt under control.
Moody's suggested that the government which came to power in September last year, may have under-estimated its debt servicing costs due to a combination of rising global rates as developed countries move to fight inflation.