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The Bahamas and Trinidad and Tobago have been fingered as the next two Caribbean countries expected to default on their sovereign debt, with widespread repercussions for their economies, populations, creditors and, eventually, the corrective policy prescriptions that are likely to come to bailout vehicles such as the International Monetary Fund (IMF).
Chief economist at Barbados-based fintech company, Bitt Inc, Marla Dukharan, is warning that long periods of economic policy inaction by successive governments, and the fallout from the on-going COVID-19 pandemic, have combined to derail prospects of economic stability and sustainability in those countries. For The Bahamas, she adds, the economic wipe-out resulting from the devastation estimated at some US$3.4 billion caused by Hurricane Dorian in September 2019, has cast a long shadow over the tourism-dependent country. Now the COVID-19 pandemic has dealt the nation a double whammy.
She said that, following defaults by Barbados and Suriname, The Bahamas was likely to be next, necessitating restructuring and IMF stringency in the near term.
Speaking at a recent virtual roundtable discussion on the prospects of Caribbean economies during the COVID-19 pandemic, hosted by the Arthur Lok Jack Global School of Business of The University of the West Indies, St Augustine Campus in Trinidad, Dukharan, a Trinidadian, reserved the harshest criticisms for governments of the twin-island republic.
The country, she said, averaged zero growth over the 10 years before the pandemic and haemorrhaged foreign exchange reserves since 2014, while spending profligately and borrowing just to service existing debts that are unsustainable.