NASSAU, BAHAMAS – The country’s external reserves could end the year above $1.5 billion due to reinsurance inflows and the proceeds from the Government’s foreign currency financing accumulates, Central Bank Governor John Rolle said yesterday.
However, Rolle noted external reserves could decrease slightly in 2020 during his quarterly media address at the Central Bank.
He continued: “These resources will be spent on construction materials, foreign services, and other recovery related imports during 2020. Access to foreign exchange of this mix is an essential part of The Bahamas’ ability to recover from hurricanes, without putting the value of the Bahamian dollar in jeopardy.
“For the Government and households, it is, therefore, most advantageous to reduce debt as much as possible in ordinary times, so that comfortable space can exist to borrow in times of emergencies. This goes hand in hand with other strategies to invest in more climate resilient infrastructure.
Rolle said: “As of today, the external reserves are just above $1.5 billion, which is about $200 million higher than at this same point last year. It captures some of the initial reinsurance inflows, but also stronger net retention of tourism and foreign investment receipts from over the first nine months of the year. Some of The Bahamas’ rebuilding will also use foreign exchange from ongoing earnings on tourism and foreign investment activities, and some costs will be covered from savings which some families and business have stored up.
“As to the outlook, the Central Bank will maintain an accommodative posture for private credit growth, including more generous concessions for families in the hurricane damaged areas.”
Rolle noted the bank will also continue to focus on containing medium-term risks to foreign reserves, through the gradual reduction in its holdings of Government debt.
“Heightened attention is also being placed on financial sector disaster recovery strategies, which will include how the digital currency can support more rapid return of commerce and dissemination of social and humanitarian assistance after natural disasters,” he added.
“The Central Bank will also explore how homeowner insurance practices could be strengthened, to make families more financially resilient.”