Further thoughts on the new Bahamas government lack of a "honeymoon". Is any change to "Thunderball" note required?

JAMAICA / BAHAMAS - In Brief 22 Sep 2021 by Keith Collister

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It is useful to look further at whether the recent Moody's ratings downgrade signifies any material change in The Bahamas position since my "Thunderball" pre-election note.1) Was the downgrade due to the election result? - Not very likely. The rating meeting occurred the day before the election and the rating agencies have structured processes. Over the medium term e.g a five year term, there is not likely to be an enormous difference in economic policy and indeed there was not much difference in the the manifestos. The Bahamas has difficult to resolve clear structural issues which neither government has seemed to change much over the last two decades since the end of the 1990's.2) VAT reduction in PLP Manifesto - The Bahamas now has fiscal responsibility legislation which should be effective at least for the life of the current term. Reducing taxes there would effectively mean raising taxes elsewhere as occurred with an similar but slightly different election winning promise in Jamaica involving reducing income tax.3) Tourism recovery in 2024 seems conservative - A median view is that 2023 is a better bet but Delta Variants etc makes it difficult to be confident of a full winter 22 tourism season recovery (eg to 2019 levels) as looked possible at the end of July. So not entirely unreasonable to use 2024 effectively as a downside case, with possibility of upgrading outlook.4) Social spending is up and tourism (and therefore tax revenue) has remained weaker than expected for most of the past 18 months. Unlike Jamaica Bahamas doesn't have contra cyclical remittance flows of significance so it will run huge current account deficits and fiscal deficits two years in a row.5...