We were recently provided with stark reminders of the current state of our economy and the plight of the average Bahamian. There were the latest unemployment figures and an upgrade of our sovereign credit rating from junk status to a better junk status.
In-between, Bahamians in the public service received bad news that the payments they were promised and anticipated for September 2025 will not be made until December 2025. The backlash from workers was significant while the ministers of finance and the public service took turns throwing each other under the proverbial bus as union leaders lamented being sidelined in the whole process.
Last week, we were greeted by an unwelcome Tropical Storm Imelda which wreaked havoc on several islands with widespread flooding and damage to property. It just seems that our people cannot get a break during these difficult times.
Shifting tone and blame on rising unemploymentAccording to the Bahamas National Statistical Institute (BNSI), The Bahamas’ unemployment rate stood at 10.8 percent in January 2025, up from 8.7 percent in October 2024. The unemployment rate for the first quarter of 2025 is higher than the pre-pandemic rate of 9.5 recorded in May 2019.
According to the BNSI, youth unemployment remained stubbornly high at 20.9 percent and underemployment remains a challenge.
It is generally known that the peak period for our tourism industry kicks off after the Thanksgiving holiday and lasts until April. In contrast, the off-season or slow period spans between August and November. This means that the latest unemployment figures were obtained during the peak season of our number one industry.
The government seemed initially shocked by the rate of joblessness, based on the delayed response to the BNSI’s release after months of touting the low unemployment numbers.
However, the Davis administration shifted into damage control mode stating that the numbers don’t reflect the current state of the labor market and blaming the lack of skills by Bahamian workers for the unemployment numbers.
This was a different tone and energy from their narrative when the unemployment rate was 8.7 percent. At that time, the government credited its economic and labor market policies for the decrease in the unemployment rate, while stating that they were expecting even more good news in the coming months.
There was no reference to a skills gap during that short-lived victory lap. Are the government’s policies no longer working? If the rise in unemployment was observed in the peak tourism season, what can we expect when the survey is completed during the slow season? Is this another case of the government evading responsibility and blaming the Bahamian people when it is convenient?
Credit rating upgrade from junk to junkThe Bahamas’ credit rating was first downgraded to junk status by Standard & Poor’s (S&P) in December 2016 under the previous PLP administration. The downgrade followed hurricanes Joaquin and Matthew at a time that the promise of an economic boost from Baha Mar had not been fulfilled.
The downgrade in September 2021 was in the aftermath of Hurricane Irma in 2017, Hurricane Dorian in 2019 — the most devastating and strongest hurricane to hit The Bahamas — and the once in a century COVID pandemic in 2020 which crippled the global economy.
The first downgrade to junk bond status lowered The Bahamas’ rating from BBB- to BB+. For further clarity, BBB- is the minimum rating for investment grade status.
Any rating below BBB- is regarded as junk status and follows the following order: BB+, BB and BB- among others.
The recent upgrade which is being touted by the government places our rating at BB- which is three notches below investment grade and lower than our junk bond rating from the BB+ initial junk rating in 2016.
The Davis administration inherited an economy in recovery mode with pent up demand and revenge travel boosting tourism numbers.
The current PLP administration has also benefited from four years without any major natural disasters and a pandemic, while increasing taxes have improved their revenue numbers significantly.
While the jury is still out on the impact of TS Imelda, it is fair to state that it pales in comparison to Dorian and the COVID pandemic. In light of these favorable conditions, the Davis administration has clearly underperformed and ought to temper its celebration of the junk bond upgrade.
Economic and tourism performanceThe economic growth rate has slowed since the bounce back following the reopening of the economy post-COVID and the extraordinary double digit growth rates experienced by the country.
The significant contraction in the Bahamian economy caused by Hurricane Dorian and the global pandemic made such an impressive growth rate inevitable. Alas, we are now in a low growth rate environment in an economy not growing fast enough to absorb new entrants into the labor market.
Tourism numbers also tell the tale of an economy in need of major ideas and innovation. The number of cruise visitors has increased due to the expansion of the Nassau Cruise Port which was commissioned under the last FNM administration but stopover visitor numbers are down.
It is common knowledge that stopover visitors inject much more money into the economy than cruise passengers. Data coming in from the major hotels, resorts and stakeholders have shown a year on year decline in tourism performance during the offseason. This is bearing in mind that some resorts have either fully or partially closed, while local businesses have struggled to stay afloat.
Bahamians are strugglingIn the aftermath of TS Imelda, talks about the unemployment rate, tourism numbers and sovereign credit rating are not paramount in the minds of the average Bahamian as they struggle to make ends meet on a daily basis.
It is simply too expensive to live in The Bahamas in 2025. The inflationary pressures coming out of the pandemic were worsened by a terrible decision by the Davis administration to impose a 10 percent value-added tax (VAT) on breadbasket items and necessities upon assuming office and recently maintaining the rate at 5 percent on items that were zero rated under the previous FNM administration.
The cost of goods and services has risen significantly while the income of the populace has not kept pace. Bahamians are no longer living from pay check to pay check, but rather they are living in a deficit while robbing Peter to pay Paul.
The misery index is at an all-time high and many have resigned to a place of hopelessness. Our people have seen their electricity bills exceed their rent or mortgage payments while being taxed into poverty.
This is why the delayed payment to public servants hit many hard. Many parents were looking forward to the September payments, having exhausted their funds or obtained credit to prepare their children for school.
The delay in payment and excuses given were viewed as an insensitive move by a government that has established a reputation for lavish spending on travel, consultants and extravagant events. Bahamians are struggling but the Davis administration is simply out to lunch and tone deaf to understand the plight of the masses.
On an even sadder note, we mourn the passing of the Hon. Vaughn Miller. We pray for comfort for those he left behind, knowing that earth has no sorrow that heaven cannot heal. May his soul rest in peace.
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