GRAVE CONCERN: Opposition sounds alarm over gov’t access to IMF funding

NASSAU, BAHAMAS — Opposition Leader Michael Pintard yesterday sounded the alarm over the potential use by the government of up to $232.8 million worth of IMF Special Drawing Rights (SDRs) that are held as part of the external reserves of the Central Bank.

Pintard noted that borrowing from the Central Bank is the equivalent of printing money, adding there were legislative limits over its use.

The bank recently announced that it has made arrangements with the Ministry of Finance for the government to have direct access to the $174.8 million in special drawing rights (SDRs) allocated to The Bahamas by the International Monetary Fund (IMF) in 2021.

In a statement, Pintard called on the government to publish the Memorandum of Understanding referenced by the Central Bank in its Monthly Economic and Financial Developments report for the month of November.

“It appears that the government is using a Central Bank loan facility to access more than $200 million IMF provided-resources and has failed to inform the Bahamian people of the details of this transaction,” Pintard said.

“There are several crucial questions that must be answered! How long is the loan for? What are the repayment terms? How will this be accounted for by the Central Bank and by the government? What is the state of the country’s finances that necessitated this irregular decision? What has changed over the last several months that has caused this apparent reversal in the Central Bank’s position?”

Pintard furthered that the Central Bank Act only permitted the bank to offer short-term loans and advances to the government which must be subject to prevailing market interest rates, and for a period not exceeding 91 days.

According to the act, he said the Central Bank could not make any direct or indirect advances to the Government or any state-owned enterprise with very limited exceptions.

“So we demand that the Minister of Finance explain what the legal basis is for this loan from the Central Bank that allows the government to borrow these IMF-issued SDRs,” he said.

“We note also that this facility and the related facility was not announced by the Government – which is curious given their endless public relations exercises,” Pintard said.

“We note that the intent to take out this Central Bank loan was not mentioned in its annual borrowing plan published just a few months ago. Could it be that the Davis administration is finding that it cannot raise the money it had planned from its domestic sources and so has chosen to borrow from the foreign reserves instead, and outside the established legal parameters?”

Pintard noted he has written both the Prime Minister and the Governor of the Central Bank for clarification on this matter.

“As always, this administration pays lip service to the notions of accountability and transparency, but consistently hides all serious and material matters from the Bahamian people,” he added.

“This is a grave matter and the Bahamian people must be assured that the government is undertaking all of its financial matters fully consistent with all applicable Bahamian laws and for the benefit of the Bahamian people.”

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