The International Monetary Fund (IMF) has completed an ***”Article IV Consultation”*** of The Bahamas, providing an expert, objective and candid assessment of the direction in which the economic policies of the country are heading. The assessment was accomplished in line with a global, cooperative, and consensual approach, as enshrined in the IMF’s Articles of Agreement.
In its preliminary findings, the IMF Mission to The Bahamas supported key policies being implemented in the following areas, all to which the Government attaches high priority:
-maintenance of fiscal balance
-continued strengthening of the regulatory regime in the financial services sector
-ensuring the continuing competitiveness of the Bahamian economy
On this last issue, Sir William Allen, Minister of Finance, has noted that the Government’s emphasis on competitiveness is not a dedication to an economic abstraction. *”Competitiveness means having in place the policies, processes, attitudes and instruments which ensure that the cost structure of the economy is moderated so that employment opportunities are maximised for present and future generations of Bahamian workers and entrepreneurs, and that economic growth is sustainable”*, said Sir William.
With particular regard to the regulatory regime, the Mission endorsed the measures introduced by The Bahamas for strengthening its regulatory environment. Specifically, the IMF Directors commended The Bahamas for the major legislative effort undertaken – within a short period of time – to address international concerns about offshore supervision, money laundering, and tax practices. The decisive steps taken to implement the new legislation also received praise.
In assessing the “Consultation”, the IMF’s Executive Board commended the Bahamian authorities for the continued adherence to sound macroeconomic policies. Such policies were credited for the substantial inflows of private investment, the decline in unemployment, and the improvement in the country’s social indicators. These indicators reportedly remain among the most favourable throughout the Latin American and the Caribbean region. Executive Directors pointed out that the main challenge for the period ahead will be to build on these accomplishments *”by maintaining a prudent fiscal stance, enhancing competitiveness, and pressing ahead with pending structural reforms.”*
The present administration’s policy of gradual fiscal consolidation has been a key factor in the economic recovery sustained since the mid 1990s, according to the Report. The IMF projects a growth rate of 3.5% in 2001, reflecting continued positive prospects although down from 2000’s 5% growth. *(Note: A positive rate of growth has been recorded since 1992, with rates of 3% or higher since 1995)*
This compares with estimates that the global economy expanded 4.8% in 2000, but will slow to 3.2% in 2001, while in the United States – the major economic partner of The Bahamas – growth was 5.0% in 2000, with a markedly reduced 1.5% projected for 2001.
The Government has indicated its intention to invite the IMF to undertake a review of the offshore financial services sector later this year, or early 2002. This will be followed by a Financial Sector Assessment Programme (FSAP), a review of the financial sector as a whole.
Consistent with its commitment to transparency, the Government authorised publication of the Mission’s Report after its consideration by the Executive Board, and the Executive Board’s report has been released in Public Information Notice (PIN) No. 01/89.
The Consultation was part of the IMF’s Articles of Agreement, calling for regular bilateral discussions with members. The process involves the collection of economic and financial information and discussions with officials on the member country’s economic development and policies.