The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

The Central Bank’s governor yesterday voiced confidence that The Bahamas “has the policy tools” at its disposal to ensure it avoids any default on its $10.356bn national debt.

John Rolle said: “I don’t think The Bahamas is going to default. I think The Bahamas has all of the policy tools and levels within its control to continue to manage its debt obligation. It doesn’t undervalue the fact that you’re in the midst of a very difficult fiscal period, and you just have to make the right choices in getting beyond the period and in planning for the longer term.”

The national debt stood at $10.356bn at end-June 2021, while the debt-to-GDP ratio stood at 100.4 percent - indicating that the national debt is now bigger than the size of the Bahamian economy and its annual output.

Mr Rolle, addressing The Bahamas’ growth prospects, said: “As to what’s happening in the economy, in some respect this is the recovery path that was expected, and it will take many months for you to be back at the seasonal parity where you would have been in tourism and that’s what we’re seeing.

“We’re also seeing that insofar as the foreign exchange flows coming into the country, 2021 has already taken in more inflows than 2020. So that is a sign that tourism’s contribution is picking up and it has overtaken the total amount that was provided from that sector last year.”

Mr Rolle added that Dorian reinsurance inflows largely stopped in 2020, but noted that “it is possible” some may still be coming in. “What we know, based on the amount of work that had come in, was that there’s still some drawdown of those resources that are likely to be drawn down related to rebuilding. So we anticipate, and favourably expect, that people will use those resources for further rebuilding activities,” he said.

The Bahamas has received $246m in special drawing rights (SDRs) from the International Monetary Fund (IMF), and Mr Rolle said: “We have an option if we need to use those SDRs to supplement foreign exchange supplies in the economy if necessary.

“At present we’re not yet in a position where we are compelled to do that. But it is a contingency that the country has. Similar to the contingency that we had in 2009, when we got an allocation of SDRs from the IMF, because countries were undergoing difficulties in the midst of the recession and they needed to have the extra foreign exchange if necessary.”

Pivoting to the credit bureau, Mr Rolle said: “The credit bureau operators are making good progress. They are receiving reports from the banks in the first instance, and they are working with the other financial sector entities that will be reporting on the utility companies so they can progress to a regular reporting state.

“So, for all intents and purposes, the bureau is at the point where it can even begin to provide credit reports back to the agencies that have submitted data. Meaning that they’re in a position where they can do analysis on the information and provide insights back to the institution.”