NASSAU, BAHAMAS — The Bahamas is experiencing its strongest economic expansion in two decades, driven largely by a surge in cruise tourism and related investment activity, according to Financial Secretary Simon Wilson, who said the country has now reached a “fiscal inflection point.”
“Last year, we recorded the highest level of growth in maybe 20 years,” Wilson said Thursday while speaking at a meeting of the Rotary Club of West Nassau. “That growth was driven by the strong performance with respect to the tourism sector—particularly in the cruise sector.”
He credited developments such as Ocean Cay, Half Moon Cay, Great Stirrup Cay, and other cruise lines’ private destinations with fuelling a sharp uptick in construction and tourism-related activity. “They really drove growth—in investment and construction. That’s going to continue for the foreseeable future,” he said.
Wilson projected real GDP growth of “around three and a half to five and a half percent over the next three to five years,” fuelled by sustained tourism performance and broader consumption.
Wilson also noted that a Ministry of Finance’s cruise ship private island survey has provided a clearer view of cruise-related economic impact. “We look at the level of investment in these private islands, and you see that cruise tourism is going to be one of the primary drivers of growth going forward,” Wilson noted. He added that this growth has spilled over into other sectors of the economy, with rising VAT returns serving as a key indicator.
“VAT returns last year and this year are growing by double digits,” he said. “Across the board, in all sectors of the economy, we are seeing more robust economic activity.”
Addressing recent concerns about the methodology behind tourism expenditure estimates, Wilson explained that the government is increasingly relying on real-time data like VAT filings, online shopping returns, and Airbnb activity to assess consumption trends.
Wilson also observed that while cruise passenger spending in New Providence is less than cruise passenger spend across the country itself, with investment by cruise lines in their private island destinations having increased substantially.
“In the early days, the government chose not to tax the onshore activities of cruise ships. However, that policy has shifted,” Wilson said. “Last year, we published a new policy document which clearly articulates that the cruise ship industry’s onshore activity should be taxed at the same level as land-based activity. That means a cruise ship operator is paying business license and paying VAT. They must pay business license and VAT. And we are very adamant that that must happen.”
Wilson stressed the government’s firm stance on preserving certain activities for local businesses. “Activities reserved for Bahamians must be reserved for Bahamians regardless of the location once it’s in The Bahamas. For example, some cruise ships operated water sports. We’ve said to them in no uncertain terms that is not acceptable. That activity must be reserved for Bahamians.”
He also highlighted enforcement measures regarding cruise ship employees working on private islands. “If you come off this cruise ship and you work, you must have a work permit—be it for two hours, one hour, eight hours—and you must pay immigration a fee for that employee. That’s the law, and we are enforcing that law.”
While the government is not currently contemplating broader taxation of the cruise experience, Wilson noted the significant economic contribution of cruise passengers who disembark in the Bahamas. “Ninety-eight percent of cruise passengers have actually disembarked in The Bahamas. That generates revenue for the cruise lines and generates revenue for the government.”
Wilson also emphasised cooperation with major cruise lines, many of which are public companies conscious of their tax compliance obligations. “We have wonderful cooperation with major cruise lines. We have stepped up the number of officers on the private islands and in the private destinations to ensure compliance.”
Addressing the fiscal outlook, Wilson stated: “On the fiscal side, we are at an inflection point, I call it a fiscal inflection point. Historically, The Bahamas was driven by deficits. Governments came to Parliament and presented budgets with deficits. That recently changed with the last budget.”
“I think that’s going to happen for the next three to five years. We are at a fiscal inflection point, where going forward, we will have positive budgets. A balanced budget is a significant achievement, no question about that, but balancing the budget without imposing extraordinary taxes is a bigger achievement.”
