Turnpage

Please visit our sponsors

RSS Feed
 

Current News & Press

 

Advertisement

The Bahamas Investor

News & Press Archives

 
The Bahamas Investor on facebookFollow The Bahamas Investor on TwitterSubscribe to RSS feeds from The Bahamas Investor
HOME > 
News & Press > 
PM to relax Exchange Control measures

Prime Minister and Minister of Finance Perry Christie announced in the House of Assembly, March 29, 2017, that the government has approved the relaxation of certain Exchange Control measures to provide access by certain categories of Bahamian-owned businesses to investment financing in foreign currency. 

Source:
Date:
Updated:
TheBahamasInvestor.com
Monday, April 3, 2017
Monday, April 3, 2017

Prime Minister and Minister of Finance Perry Christie announced in the House of Assembly, March 29, 2017, that the government has approved the relaxation of certain Exchange Control measures to provide access by certain categories of Bahamian-owned businesses to investment financing in foreign currency.

“The government has also agreed to allow international banks present in our jurisdiction to have more flexibility in providing financing for residential real-estate investments for non-Bahamians,” Prime Minister Christie said.


Over time,Christie said, those measures were expected to have gradual positive impacts on small and medium-sized ventures; support the strengthening of linkages between tourism and other economic sectors; and provide additional stimulus to the upper end of the real-estate market.

The Central Bank of The Bahamas was preparing to implement the reforms within the coming days, and will communicate further with the public on the details of the administrative framework.

Prime Minister Christie said: “Where Bahamian ownership is potentially exposed, either because of secured borrowing or equity ventures, the Minister of Finance must sanction these transactions. The Finance Minister either relies on due diligence done by Central Bank or by the Bahamas Investment Authority and the consensus of the National Economic Counsel or NEC.”

“In all cases approvals are subject to the National Investment Policy, having regard to activities which are reserved for Bahamian participation and control. Parts of this framework will now be delegated to Central Bank.”

Prime Minister Christie said that Central Bank already had delegated authority under Exchange Controls to vet applications to borrow in foreign currency from commercial banks. Some of the protocols around such approvals were also being relaxed, he noted.

“The relaxations, are in respect of both resident-owned businesses and non-resident controlled ventures,” Prime Minister Christie said. “They will have access to both debt and equity financing, and be subject to periodic financing limits which I will outline below.”

“Where local commercial banks are able to provide credit funding, the commercial banks will have increased delegated authority to do so, against Central Bank issued guidelines, requiring no prior case-by-case approval from Central Bank,” he added. “All other financing sources would require prior approval from Central Bank.”

Prime Minister Christie pointed out that the sectors or categories of businesses that would eligible for consideration are as follows: agriculture and fisheries; manufacturing; transportation (such as land, sea and air); tourism (including hotels and restaurants); construction and real estate targeting residential tourism; energy and energy conservation activities; education; health sector activities; telecommunications; information and communications technology or ICT; and infrastructure.

“The categories of businesses above, when owned by Bahamians would be permitted to obtain funding of up to $5 million every five years as follows: if they obtain these resources from local commercial banks in the form of loans then no other condition would be imposed; if the funding is unsecured and from non-resident sources, again no other condition would apply.” Prime Minister Christie said.

“In the case of a sector or activity that is reserved exclusively for Bahamians, funding from non-residents or non-commercial bank sources either through secured debt or through equity participation would not be allowed to exceed 40 per cent of the exposed capital of the business. Otherwise, the venture would have to revert to the NEC for approval.”

Also, he said, with the $5 million ceiling, secured funding would not be subject to any other restriction if the activity is not in a reserved sector of the economy.

Prime Minister Christie noted that, in giving consideration to financing obtained from international banks that are licensed to operate from inside The Bahamas, only non-residents would be permitted to use that option, and only for resort or residential developments.

“Where such lending is not for commercial purposes, however, the borrowers would be expected to service their obligations from resources obtained from outside The Bahamas,” he said.

Prime Minister Christie said that the other category of lending that the government wished to facilitate, was resources channeled through the private sector lending arms of multilateral agencies such as the Inter-American Development Bank (IDB) and the World Bank.

“The government will impose no restriction on the amounts of such of lending to resident entities,” he said. “This in recognition of the fact that these lenders apply rigorous due diligence in their lending decisions and they are essentially development-focused in their activities.”

Prime Minister Christie said Central Bank will provide the public with more details on how Exchange Control approvals would be processed in each of the aforementioned cases.

“I should point again though that where commercial banks are involved, businesses will have the option of having all of the due diligence and vetting done by the commercial banks, with Central Bank receiving the notification on the back end,” he said.

Except for non-residents who finance upscale housing investments, Prime Minister Christie said, the eligibility to borrow in foreign currency or to joint venture with foreign partners will also allow the eligible businesses to obtain foreign currency at the official rate to service their obligations.

“I should clarify that these relaxations are only in respect of access to financing,” he said. “Business should continue to expect current rules to apply as concerns restriction on foreign currency deposit account.”

The net effect of those reforms was that given the sectors targeted, the economy’s capacity to earn foreign exchange would be enhanced over time, Prime Minister Christie said.

He pointed out that being able to benefit from these opportunities will still require that the business ideas being put forth were viable and could withstand the scrutiny of potential lenders and investors.

“Central Bank will closely monitor inflow activities related to the relaxation measures, and will make recommendations on adjustments in the framework from time to time to ensure that it is always sustainable,” Prime Minister Christie said.

“For now, this gradual, selective approach is sound, given the prudent fashion in which we are always advised to proceed, in the advice of the IMF other respected authorities, given that we are a small, and still very vulnerable economy.”

Prime Minister Christie revealed that, given the strong interests that had been expressed by the business around the ease of access to funding, he was confident that private sector innovation will take hold and that both new and expanded ventures will be launched.

“For small and medium-sized enterprises in The Bahamians, the $5 million periodic ceiling on financing amounts would for the most part not be a binding constraint,” Prime Minister Christie said.

The Bahamas recently hosted three receptions and co-sponsored the culminating gala dinner of the Florida Caribbean Cruise Association at the 33rd Annual Seatrade Cruise Conference in Ft. Lauderdale.

The Bahamas is enjoying a resurgence in tourism, government officials reported over the weekend at the official opening of Warwick Resort, Paradise Island’s first all-inclusive, adults-only hotel.

The Bahamas Investor
Administrative Links
  


  © 2017 ETIENNE DUPUCH JR PUBLICATIONS LTD