Bahamas to ‘feel brunt’ of Russian sanctions shock


Hubert Edwards


Tribune Business Editor


The Bahamas will “feel the brunt” of the fall-out from Russia’s Ukraine invasion, a governance reformer warned yesterday, with hyper-inflation threatening to plunge the world into a depression.

Hubert Edwards, the Organisation for Responsible Governance’s (ORG) economic development committee head, told Tribune Business that “this one’s not looking good for us at all” given the extent to which the imposition of sanctions on Russia’s economy is causing worldwide shocks.

Describing the Biden administration’s ban on Russian oil and gas imports as “a significant turn”, he suggested that the $139 per barrel price achieved by oil markets when news of the US move first leaked was a potential foretaste of how high gasoline and energy prices may go in The Bahamas.

“I think we can expect significant upward pressure on inflation,” Mr Edwards warned. “Some analysts have predicted $150 a barrel, and I’ve seen numbers as high as $200 a barrel, which effectively represents an almost doubling or more of where oil prices were for the last two years.

“Based on the financial allocations at this point, we can expect the Government will have to revisit its projections for the actual cost of oil for Bahamas Power & Light (BPL) and other entities that use these types of input.

“It definitely translates into higher prices. The cost of moving goods from the wharf to the warehouse will rise, and it means a potential increase in shipping costs which have been very high in recent times. It means potential disruption in the supply chain and longer lead times for the delivery of goods and for imports to clear,” he continued.

“With all the circumstances at play, and the actions taken not just by the US but the international community across-the-board with sanctions on Russia, it is clear we are going to feel the brunt of some of these effects. Sanctions creating supply side shocks must drive the prices up because the demand is still there.”

Agreeing that the oil price shock, combined with pre-existing inflation imported from the US and the general uncertainty caused by Russia’s Ukraine invasion, will “dampen” The Bahamas’ post-COVID recovery, Mr Edwards said much depends on how long the conflict in eastern Europe lasts and how widespread it becomes.

Besides increased oil costs proving a drain on The Bahamas’ foreign currency earnings and external reserves, he added that growing inflationary pressures may force the US Federal Reserve and other central banks to raise interest rates to combat rising prices.

While this may occur slowly, Mr Edwards warned that “it will happen”. He added: “For The Bahamas, that will mean that the cost of its foreign currency borrowing will increase and the cost of future foreign currency borrowing will increase. Bahamian foreign currency bonds are already trading at 11 percent.

“If the economic situation worsens, our finances will be affected, and that could spur a crisis anywhere - not just for The Bahamas but countries around the Caribbean. You’re looking at kind of a hyperinflation environment that could lead to a recession.

“Ultimately, if this drags on at this rate, and the pace it is going, the world could slide into a depression and that would be bad news for us on this side of the world,” Mr Edwards continued.

“Tourism is our largest market, largely based on discretionary income, and a recession/depression affects people in these markets. The decision to travel for leisure will be adversely affected. This one is not looking good for us at all.”


Sickened 11 months ago

Our prime rate better not go up for at least a couple of years because it took our central bank years to lower it when everyone else started lowering theirs.


sheeprunner12 11 months ago

Agree ............ Nothing much is happening at the present rate. Imagine if it goes up?


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