‘More Pressure For Change’ Call After Imf Reveal


Robert Myers


Tribune Business Editor


Governance reformers yesterday called for “more pressure for change” after the IMF warned that addressing structural impediments to growth was “critical” ahead of joining the WTO.

Robert Myers, the Organisation for Responsible Governance’s (ORG) principal, told Tribune Business that the International Monetary Fund (IMF) appeared to have taken a page “out of our book” by calling on The Bahamas to lower energy costs, boost private sector access to credit and address “skills mismatches” in the labour market.

“Addressing structural impediments and preparing the economy for a further gradual opening is critical,” the IMF argued yesterday following an 11-day visit to Nassau for the annual Article IV consultation with the government and private sector. “Several steps have been taken to address long-standing structural issues, boost private investment, and lower the cost of doing business.

“Planned accession to the World Trade Organisation (WTO) makes it even more urgent to tackle remaining impediments. Lowering energy costs, improving private sector credit access and tackling skills mismatches in the labour market are critical priorities.”

Mr Myers, in response, said: “We completely concur. We’re glad to see them reiterate what we’ve been saying for the past three to four years. We need more pressure for change. We need more focus on these things, and it’s good to hear the international acknowledgement of these issues.

“Hopefully the Government, and future governments, will start to adapt accordingly and really focus on these core issues that we’ve been calling for. Unemployment is not really going to decline unless we can really increase GDP and education.

“We’ve got to in this country improve the ease and cost of doing business, which will increase business and foreign direct investment (FDI) confidence, and then go out and get these people investing in the country while we’re training Bahamians to be prepared for these jobs.”

Mr Myers said the Bahamian workforce needed to be “prepared for a different world”, and called for more vocational and apprenticeship programmes beyond the one that the Government is launching in partnership with the Inter-American Development Bank (IDB).

The Minnis administration will also likely argue it is already moving to address the deficiencies identified by the IMF, with Bahamas Power & Light’s (BPL) agreements with Wartsila and Shell designed to reduce energy costs and improve supply reliability. It can also cite the $30m IDB project to digitise government services as a key aspect of efforts to improve the ease of doing business.

The IMF, meanwhile, yesterday called for the creation of “a real estate price index” as part of efforts to help Bahamian commercial banks and other lenders better value distressed properties and work out non-performing loans.

“The banking sector remains sound, but credit growth is hampered by non-performing loans (NPLs) and lack of information about potential borrowers,” the Fund said. “The 2019 FSAP (Financial Sector Assessment Programme) found that the banking sector enjoys healthy profits and maintains high capital and liquidity ratios.

“Further progress in supervision of credit underwriting and timely resolution of NPLs remain key objectives. A local real estate price index should be introduced to increase visibility into the residential housing market and improve NPL valuations. The credit bureau, once operational, should strengthen the quality and pace of credit activity and improve assessment of lending standards.”

The IMF also called for governance at state-owned financial institutions to be strengthened in the wake of Bank of The Bahamas’ $300m-plus bail-out, so that there was “continued effective and independent supervision”.

It recommended that the Central Bank address the $1.5bn surplus liquidity overhang in the commercial banking system to ensure a soft landing - something the regulator has shown itself to be keenly aware of.

“Excess liquidity calls for a strengthening of the monetary policy transmission mechanism,” the IMF said. “The accommodative monetary policy stance is appropriate given the cyclical position of the economy and the negative credit gap. However, a large structural liquidity surplus exists given exchange controls and the absence of a well-developed domestic securities market.

“Deepening the domestic sovereign debt market through regular auctions is recommended. The Central Bank of The Bahamas should continue to reduce its holdings of government debt, and adoption of the amendments to the Central Bank law is recommended to strengthen its governance and define limits on government lending.”

The IMF added that the risks associated with the Central Bank’s digital Bahamian dollar project “need to be well understood” and the necessary cyber security safeguards built in. And it said “potential spillovers” into the domestic banking sector from unifying bank licence regimes in response to European Union (EU) pressure needed “careful monitoring”.

“The current account deficit increased to 15.9 percent of GDP in 2018, in part reflecting one-off factors related to the completion of Baha Mar and an overvalued real effective exchange rate. Significant - albeit declining - current account deficits are projected to continue, financed mainly by foreign direct investment,” the IMF said.

“In the context of the continued strong commitment to the exchange rate peg, structural reforms to boost competitiveness alongside fiscal consolidation and accumulation of foreign exchange reserves are critical to strengthen external buffers.”


bogart 1 year, 9 months ago

......ah yes....DA REAL ESTATE PRICE INDEX......BUT PRIOR TO PRICING......DERE MEST BE ONE GOOD REGISTRY WHERE LEGAL OWNERE ARE IDENTIFIED....opens..up pandora box from sho Quieting shows....BUT DA PRICING PARTICULARLY.....FER YEARS AN STILL NOW IS DA PRICING OF PROPERTIES.....AND HAS TO BE ...IN FAMILY ISLANDS....WHERE BANKS TEND NOT TO FINAMCE....as it is known in settlement dat buyers do not buy repos knowing the issues of buying one relatives property....REPOS BY ITSELF WID 4000 REPOS NEEDS INVESTIGATING FOR FRAUD COMMITTED....NEGLIGENCE.....LACK OF CARE TO CUSTOMERS......AN....LIKELY JAILING SOME BANKERS BEING GUILTY....UPPER MANAGEMENT COMPLICIT....KNOWING...LIKELY FRAUD.........quite unreasonable to assume all 4000 mortgages were wrong....crippling mortgage business....imperilling true market values prices market values......affecting everyong without liens on devaluing .....erryone else..........CURRENTLY ISSUUES WID DA REGISTRY BK VOL #s...WID DISCLAIMER SEEMS ALL LAWYERS ON BUNDLE OF DOCUMENTS TO BANKS ON TITLE....ETCETC....getting efficient productive works...using property collateral....enables vast improvments quick financing.......productive nation..increases GDP....BY POINTS.......BUT.....DOING DIS IMPROVMENTS.....PUTS MANY LAWYERS OUT OF WORK...ooops !


Well_mudda_take_sic 1 year, 9 months ago

Is this guy Myers now on the Red China lobbyist payroll too.....lobbying (like Laing) for us to join the WTO notwithstanding the devastating consequences doing so would have for our country??!! The reasons Red China wants the Bahamas to join the WTO are all too obvious, and not at all in the interest of Bahamians.


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