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IMF: Bahamas weathering crisis better than peers

Compared to its neighbours, The Bahamas is performing relatively well in economic terms due to lower debt levels and strong fiscal policy, according to the International Monetary Fund. Construction projects, gradual recovery in tourism drive muted, but sustained growth. Pictured: Miguel Savastano (left), deputy director of the IMF’s Western Hemisphere Department and Gene Leon, the IMF’s senior resident representative in Jamaica and Mission Chief for The Bahamas.  

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TheBahamasInvestor.com
Monday, October 31, 2011
Monday, October 31, 2011

The Bahamas is weathering the global economic fall-out better than many of its regional peers, according to officials of the International Monetary Fund (IMF).

“The Bahamas started from a much stronger position than others, because it had essentially low debt levels to start with. That gave it more room to observe the shock of the crisis and three years later, it’s still–in relative terms–better than others,” says Miguel Savastano, deputy director of the IMF’s Western Hemisphere Department.


“Relative to the peer countries in the neighborhood The Bahamas is doing pretty well, but the outlook for the whole neighborhood is not that great given what’s happening in the rest of the world.”

At the start of the recession in 2008, The Bahamas had buffers, explains Gene Leon, the IMF’s senior resident representative in Jamaica and Mission Chief for The Bahamas.

“When the crisis came The Bahamas was able to engineer stimulus to try to maintain or to reduce the impact of the crisis on the country. That in a sense brought the debt up,” says?Leon.

Since then, tourism numbers have slowly began to rebound, although still lower than pre-crisis levels.

Meantime, construction projects such as the $3.4-billion destination resort, Baha Mar, are moving ahead.

“Hopefully, that should generate potential growth both in terms of output in jobs and revenues in the future,”?says Leon, who notes the Bahamian government remains very aware of the rise in public debt.

“They are planning to be able to put in place both revenue measures–improvements in tax administration, potential revenue earning measures–and containing expenditures both on the recurrent side and targeting capital with a growth dividend in mind. At the end of the day what you will have is first stimulization then a reduction in your dept to GDP ratio at the debt level,” he advises. “The bottom line is, you don’t want your debt to GDP to keep rising.”

Fears of another recession in advanced economies have sparked global financial markets volatility.

Is The Bahamas prepared to weather another economic storm so soon?

“Yes, they are prepared, in the sense that they are aware and there’s a general agreement between the government and all key stakeholders that more needs to be done in the short-run in terms of putting the public finances more in a sustainable basis,”?says Savastano.

tblair@dupuch.com

Southeast New Providence gets a new shopping plaza with 22 stores, costing $12 million. (BIS photo/Peter L Ramsay)

In a second round of streamlining initiatives, the Swiss bank claims that the cuts should bring annual cost savings of 2 billion francs ($2.24 billion) by 2013, according to Reuters news service. The move comes ahead of strict new regulations and disappointing third-quarter results.

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