IMF Headquarters 1 in Washington, DC.
By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The IMF yesterday gave the Government a much-needed boost by declaring the economy has “turned the corner”, despite warning over continued fiscal and current account imbalances.
Acknowledging that “significant challenges remain” to be tackled, the Fund’s latest assessment called for a Budget “adjustment” equivalent to 2.2 per cent of gross domestic product (GDP) - some $235 million - to slash the fiscal deficit to “desirable levels”.
The Washington D. C. based institution, unveiling the recommendations stemming from its two-week visit to the Bahamas in early March, also urged the Government to set a “permanent deficit ceiling” equal to 1 per cent of GDP as part of its Fiscal Responsibility legislation.
Besides addressing “structural bottlenecks” to economic growth, an often-repeated call in recent years, the IMF also urged the Government to establish a “savings fund” - containing cash equivalent to be between 2-4 per cent of GDP - to deal with emergencies in the aftermath of a major hurricane strike.
The International Monetary Fund (IMF) called for the Government to build-up such a disaster fund by setting aside funds equal to 0.5 per cent of GDP, or around $53.5 million, per annum whenever the Bahamas escaped being hit by storms or other natural catastrophes.
Still, the Minnis administration, beset by recent controversies over the $5.5 billion Oban Energies project and the European Union’s (EU) ‘blacklisting’ of the Bahamas, is likely to seize upon the IMF’s report as an endorsement that its economic and fiscal policies are on the right track.
“The Bahamian economy has turned the corner but significant challenges remain,” the Fund said. “Near-term prospects are improving on the back of the much-awaited opening of the mega tourist resort, Baha Mar, and a stronger US economy.
“But without resolute implementation of structural reforms, medium-term growth would remain subdued. Public debt ratios have declined on the back of a sizeable upward revision to nominal GDP, but fiscal deficits remain above debt-stabilising levels.”
The Government acknowledged last night that the IMF’s assessment was fair, the Deputy Prime Minister telling Tribune Business that the Bahamas has “a long way to go” and “remains vulnerable to external and climate shock (see other article on Page 1B).
K P Turnquest will also likely take encouragement from the Fund’s forecast that the 2017-2018, projected to come in at around $323 million, is on track to meet the Government’s target - backing his own recent assessment in the mid-year Budget.
While the half-year deficit of $198 million is equal to some 61 per cent of the full-year projection, the IMF said: “The fiscal balance is improving on the back of lower spending. After reaching 5.8 per cent of GDP in fiscal year 2016-2017, the central government fiscal deficit is expected to decline to the target set in the fiscal year 2017-2018 budget, 2.7 per cent of GDP.”
Comments
observer2 6 years, 1 month ago
Well done KP!
Keep the forensic audits going. Once you expose systemic organized corruption within the public sector the funds saved will balance the budget.
Well_mudda_take_sic 6 years, 1 month ago
Here's a translation of what the IMF is mischievously saying to our government with tongue in cheek: "YOU'RE NOT BORROWING ENOUGH - YOU CAN AND SHOULD BORROW MORE!" Now the IDB will whole heartedly place its lending teat (tit) to the sucking lips of our spend-thrift government.
DDK 6 years, 1 month ago
We can only hope they are not foolish enough to bite.
licks2 6 years, 1 month ago
Dumb DNA . . .making yinna self sound so foolish. . .IMF told us we getting we things together. . .but instead of saying they doing something finally, you gone stupid like about they just said that so we could come borrow some money!! You dumb politicians make me sick with yall low brow thinking. . .SHUT UP AND GO SOMEWHERE PLEASE!!
birdiestrachan 6 years, 1 month ago
*Thank God for the PLP and moving BAR MAR forward. without BAR MAR where would the Bahamas be?
licks2 6 years, 1 month ago
HAHAHAHAHAHAHAHAHAHAHAHAHAHA. . .good one birdie. . .I am sure that this government's work since coming to office did not single-handedly make the turn around. . .in fact I don't care who caused it at this point. . .the main fact is that it is turning around!! Now the rest of yall political Andros yard chickens can go on and determine who made the turn-around. . .I don't care who did!!
tetelestai 6 years, 1 month ago
licks2, whether you care or not does not change the fact that a large part of the reason why the economy is turning around is due to the efforts of the last administration. In short, birdie is (partly) right. We can be mature enough to have an intelligent discussion even if the facts don't necessarily suit our narrative.
licks2 6 years, 1 month ago
Have ya joy there fella/sis. . .I DON'T CARE ONE BIT HOW IT TURN AROUND. . .THAT'S FOR POLITICIANS THEM TO WASTE TIME ROWING ABOUT. . .NONE OF THEM WILL CONCEDE THAT ANYWAY. . . DON'T WASTE MY TIME TALKING FOOL ABOUT "THE FACTS". . .WHAT FACTS? YOUR FACTS? NOW YOU CAN SEE WHY THIS IS USELESS. . .POLITICIANS ARE TOO PIG HEADED. . .ALL OF THEM HAD PARTS IN MESSING IT UP AND IN GETTING IT CLEARED. . .BUT NONE OF THEM WILL TAKE NO RESPONSIBILITY FOR THE BAD AND WILL TAKE ALL THE CREDIT FOR THE GOOD. . .SO THERE. . .ONE BIG WASTE OF TIME!!
John 6 years, 1 month ago
Bahamians have tightened their belts and, like Americans, they have learned to count pennies and not leave them at the cashier or toss them in the parking lot. Many are living without light and cable and buying internet only on a need basis. The days of tossing out the furniture for new ones every Christmas are long gone or buying a new car just to attend a wedding. And with government plugging a lot of leaks in the system and seeking to produce more food the Bahamas is recession resistant.
John 6 years, 1 month ago
Imagine what the quality of life would be like when the sovereign fund becomes and the country starts collecting real and proper royalties from salt and aragonite, and fees in the millions from airlines that use our airspace. Imagine when cruise ships pay their proper share of taxes to bring taxes here and BPL converts to LNG and electricity bills fall by 30 percent at least. And the government gets it right with Oban and require them to a right portion of taxes. Imagine
licks2 6 years, 1 month ago
I supposed that since you see these fantastic future sovereign works as revenue into our consolidated purse. . .then you also have the knowledge of where the Bahamas one hundred plus billions dollars for capital constructions to bring these enterprises up to operational standard and profitability.
Porcupine 6 years, 1 month ago
Given the state of the world's economy, who really controls it, and our desperation for even a mere sliver of positive news, it would be best to suggest that the reaction should be cautiously optimistic. I remember that Enron was the world's largest corporation, shortly before it collapsed. If you really believe that the same class of people aren't making these forecasts, auditing and advising, you are not paying attention. The trends are rather clear in all of our lifetimes. The losers outnumber the winners by about 1 million to 1. If you're satisfied with that, by all means let's celebrate. Thank god The Bahamas can finally start to reap the rewards of our collective hard work and honesty, and long term planning.
TheMadHatter 6 years, 1 month ago
John...for once you and i agree. Spot on mate !!
abe 6 years, 1 month ago
yes!
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John 6 years, 1 month ago
Genesis b15:13 - 15-15 told me before the IMF did.
sheeprunner12 6 years, 1 month ago
The IMF can be compared to the fox that is placed in charge of watching the chicken coop.
John 6 years ago
All that is required for each Bahamian to become a millionaire is $400 Billion Dollars. And with all these multi billion dollar investments and natural resources in this country why is ninety percent of Bahamians saddled in personal debt and the national debt climbing towards 8 Billion dollars? Why are so many living below the poverty line? This fourth generation will not be broke.
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