Bahamas debt rises $1bn while deficit stays at $121.2m

The national debt of The Bahamas increased by $1bn during the first ten months of the 2025-2026 fiscal year. The fiscal deficit for the same period stood at $121.2m. This creates a gap of approximately $880m between borrowings and recorded spending. A senior banking executive called this gap a significant disconnect that requires immediate explanation.

Gowon Bowe, Chief Executive of Fidelity Bank (Bahamas), stated that the government must clarify how it utilizes these funds. He noted that the current accounting method does not capture all financial movements. The central bank recently revealed the debt increase to the public. Market participants are waiting for a detailed breakdown of the government's cash and investment holdings.

Cash holdings explain the gap

Bowe suggested that the government may be holding borrowed funds as cash balances. These funds could also be invested in US money market funds or other securities. Such assets do not appear as expenditure in the deficit calculations. The government uses a modified cash basis of accounting. This method excludes assets and liabilities from the primary deficit figure.

If money is sitting in bank accounts or short-term instruments, it is not yet spent. Therefore, it does not reduce the deficit. The total debt rises because the government has borrowed. The deficit remains low because the spending has not occurred. Bowe urged the government to publish its bank balances and money market holdings.

Special purpose vehicles lack transparency

A second plausible explanation involves special purpose vehicles, or SPVs. The government has created these entities over the past decade. They are used to purchase buildings and manage projects. Funds directed to SPVs may not show up in standard fiscal reports. This creates an opacity in the government’s true financial position.

Bowe called for a complete listing of all SPVs. He wants the public to see what each vehicle is used for. State-owned enterprises are already required to table audited financial statements in the House of Assembly. Bowe suggested SPVs should face similar reporting requirements. This would ensure that obligations are recorded in a timely manner.

Market demands simple accounting

The executive warned against using complex financial structures to obscure debt. He advised the government to keep its accounting simple. He stated that citizens need to understand the true net debt position. The national debt rose 8.8 percent year-over-year to $13.17bn. This increase is likely to fuel questions about fiscal sustainability.

GN auto markets/bonds: sovereign debt noted that clear communication is essential for market confidence. The government must explain the utilization of borrowings. Transparency prevents the perception of concealed liabilities. Plain financial English is preferable to exotic instruments in the public sector. The market awaits a swift response from the treasury.