Governance reformer urges policy ‘reorientation’ for economic growth

Governance reformer urges policy ‘reorientation’ for economic growth

NASSAU, BAHAMAS — A governance reformer stressed the importance of policy reorientation in unlocking the country’s economic potential, highlighting the need to carefully consider the policy guidance provided by the International Monetary Fund’s 2023 Article IV consultation and emphasizing the removal of structural roadblocks for sustained growth.

Commenting on the International Monetary Fund’s recently released full IMF Article IV report, Hubert Edwards, head of the Organization for Responsible Governance’s economic committee and principal of Next Level Solutions, noted that the report, when taken in its totality, represents a very positive pronouncement on the performance of the country and its economy. 

“It signals confirmation of already known information but, more importantly, provides significant measures of validation relative to certain policy positions of the government,” said Edwards noting that the report noted that the Bahamian economy is in the midst of a solid expansion.

“Regardless of one’s perspective, this represents the most positive collective analysis and commentary that the country has received over the last three years. It must, therefore, be taken as representing an acknowledgment that a reasonable foundation is being laid on which future positive economic development can be built. In fact, the headlining summary of the report states just that by highlighting the fact that the performance could facilitate the space needed by the government,” said Edwards.

He added that the country’s debt burden remains a key concern, with the cost of debt unfortunately projected by the IMF to run as much as 20 percent of total expenditure in the coming years. 

“While calling for policy adjustments in the areas of taxation, SOEs, governance improvement at BPL and The Resolution Unit within the central bank and the Financial Stability Council, there is a general sense, having read most of the document, I believe that the reasonable reader will conclude that the narrative is generally very positive. That position is, however, not without due warning of the challenges,” said Edwards.

Edwards contended that the Article IV report provides a very structured roadmap of alternate policy positions which should be considered carefully by the government as it seeks to unlock potential which has to date been retarded by a lack of consistent, focused, deliberate fulsome policy interventions. 

“The report is rich with policy guidance of notable relevance. For example, there is discussion on creating a more progressive taxation system; taking steps that would achieve the stated 25 percent revenue to GDP on a more sustainable basis, and highlighting the need for greater value to be garnered for economy as a result of policy shifts,” said Edwards.

“Policy reorientation is imperative in unlocking the country’s economic potential. This position I believe is critical. It aligns well with a prior statement from the Governor of The Central Bank of The Bahamas when he stated that one of the greatest risks the country faces is reverting to growth potential.  The IMF, and I readily agree, is pointing to the fact that until and unless there is a shift in the growth potential of the country, economic expansion will remain constrained. Based on that view it has projected a reducing growth path of less than two percent from 2024 to 2028.”

“Policymakers especially, but also the private sector and the country at large, should be mindful of the pronouncements of this report and, working together, seek to leverage the positives while proactively attacking those issues with downside implications. As I have often indicated, the country will unlikely grow in the sustained fashion desired unless there are changes to address structural roadblocks and bottlenecks affecting economic performance,” stated Edwards.