NASSAU, BAHAMAS — The government will have to be a “bit more frugal” with its spending as it manages the country’s debt burden, a senior financial executive cautioned yesterday.
David Slatter, RF Group’s Vice President of Investments, forecast the country will likely return to pre-pandemic growth levels in 2024 if the International Monetary Funds (IMF) projections are realized.
He was addressing Royal Fidelity’s Bahamas Investor Forum.
“Looking at the GDP growth expectation according to IMF we saw that 2020 was a rough year, down 14.5 percent, the economy was expected to grow by two percent in 2021, eight percent in 2022, and four percent in 2023. If these growth expectations come to fruition at the end of 2023 we will be about two percent below 2019 GDP level.
“In 2024 we will get back to where we were before the pandemic. For that to happen ew know tourism will be the main driver and when it come sot tourism it’s all about air arrivals.”
He said: “Another challenge for The Bahamas will be the level of government debt. The debt to GDP stands at around 100 percent currently.”
Slatter noted that government debt grew during the pandemic as the government sought to mitigate the economic fall-out.
“It is not unreasonable to expect debt to increase to support the economy and individuals which is essential,” he continued.
“That means now that we need to be a little more prudent and make sure we can handle our debt load and interest payments. We need to be a bit more frugal with how we spend our money. The fiscal spending I believe is going to have to come down.”
Still, Slatter said that 2022 is expected to be a very good year, with 2023 also projected to be a very strong year for The Bahamas.
Referencing the current COVID-19 wave, Slatter said: “Based on some of the data we have received it appears this wave is shorter, quick to the peak, and quick back down to lower levels. We think that in the first half we start to see the Omicron wave dissipate, and in the second half we get a situation where we are in more of an endemic than a pandemic.”
With regard to the Bahamian dollar fixed income market, Slatter said there are a number of private issues coming to market which will be attractive to investors. Slatter predicted that this year will be very active in the investment banking segment.
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