Report credits government’s macroeconomic policies and programs
NASSAU, BAHAMAS – The IMF said The Bahamas delivered “strong economic performance” last year, supported by what it said was strong macroeconomic policies and programs on fiscal reforms.
It noted that with downside risks prevailing, maintaining the positive momentum realized requires broad-based reforms to strengthen institutions, improve competitiveness and external accounts, and rein in on public debt.
It also said the body found The Bahamas’ financial system to be resilient to current stability threats, but encouraged action to safeguard against potential weaknesses and respond to future stress events, including expenditure control and budget preparation; vulnerability to natural disasters; and reputational risks associated with the offshore financial sector.
According to the IMF, the medium-term outlook for The Bahamas is positive with economic growth projected to achieve the slated 1.5 percent in the medium term as tourism growth normalizes.
The report noted that a slowdown in the U.S. market and other economies could impact The Bahamas tourism-dependent economy, and there remains “reputational risks” in the offshore sector, despite the strengthening of the regulatory and transparency standards in recent months.
Real gross domestic product was estimated to have grown by 2.3 percent last year, and is projected to grow by 2.1 percent this year.
The IMF said that growth was underpinned by continued growth in the tourism sector.
In a statement, Minister of Finance Peter Turnquest said the IMF’s report underscores that the government’s agenda is moving The Bahamas in the right direction and the fiscal measures to raise revenue and contain expenditure are bringing the deficits down in line with its fiscal strategy plan.
“The financial affairs of the country are stabilizing and the economy is expanding after years of stagnation; this is setting the stage for sustained economic growth and shared prosperity across The Bahamas.
He made clear that the government has a lot of work to do.
Expenditure containment, focusing new expenditure on critical matters and key programs; continue emphasis on improving revenue collection from the existing tax regime and advancing the reform agenda remain top priorities for the government, according to Turnquest.
He announced that sometime this year the Ministry of Finance will present draft legislation on public procurement and a framework for public sector financial management to the public for consultation.
“There are critical to bolstering transparency and accountability in government, which are linchpins for sustained fiscal stability and efficiency in public expenditure,” the minister said.
“The institutions responsible for nominating members to the Fiscal Council have been requested already by the Speaker of the House to provide their nominees to this body.
“The Fiscal Council will thus be formed and in place within the time parameters outlined in the law.
“The council will be provided with resources within the upcoming budget to undertake their oversight responsibilities.”
In its report, the IMF said despite positive growth in jobs, the unemployment rate remains high and is projected to decline “only gradually”.
Unemployment rose nationally from 10 percent in May 2018 to 10.7 percent in November 2018, according to the latest Labour Force Survey completed by the Department of Statistics.
According to the survey, 2,305 jobs were created during the six-month period, however, 4,250 people joined the labor force, meaning job seekers exceeded jobs created.
Yesterday, Turnquest said the government will continue to expand the access to capital by Bahamian entrepreneurs and to remove “bureaucratic impediments to Bahamians doing business”.
“Carrying over from this year’s budget, one can anticipate that the government will continue to increase its investment in education and training, recognizing that preparing Bahamian young people for an increasingly competitive global marketplace must be a pressing priority.