**Julian W. Francis
Central Bank of the Bahamas**
Governor Francis recently addressed participants at the 2004 Bahamas Business Outlook conference, sharing thoughts on the national economy and highlighting some critical strategic issues.
He said The Bahamas has been able to compete in financial services – as in tourism – not only because of comparative advantages it holds vis-à-vis competitors, but also due to a long-standing significant openness in the broad policies governing the operation of such services. According to the Governor, there are virtually no restrictions on investments by credible and acceptable parties in either sector. In financial services, he did note the exception of the domestic retail banking sector where some levels of restriction on entry do apply.
Additionally, the labour policy applicable to the nation’s two major sectors is viewed as having generally facilitated the management and technical – including infrastructural development – needs of both.
Governor Francis maintained that the Bahamas Government has consistently sought to provide necessary fiscal and administrative support to its primary sectors. With particular regard to financial services, he pointed to the recent establishment of the Ministry of Financial Services and Investments. A Ministry focusing on issues related to the sector was seen as *”clear evidence of Government’s commitment to support this industry.”*
The policy of openness, and the determination to be competitive in the primary industries of tourism and financial services have resulted from the realisation that despite the comparative advantage enjoyed in each instance, these are global industries which cannot be easily controlled by individual countries acting alone. This is especially true of the smaller countries such as The Bahamas, where one has to play by the rules of the broader global environment.
Speaking to the advantages of a non-restrictive policy, Governor Francis said the domestic economy benefits from the significantly higher levels of resources available and competitive efficiencies. Additionally, in an open economic environment, domestic resources are forced to be efficient, competitive participants.
Nevertheless, some “administrative economic controls” do exist. In his overview of the critical strategic issues, the Governor addressed some of these, including Exchange Control Regulations and Investment Policies. It is necessary, he said, to pursue the measured liberalisation path which has been followed for more than ten years now, with the ultimate objective of complete removal of exchange controls in the future — theoretically benefitting the economy by removal on restrictions to the movement of capital.
While National security, environmental, and reputational concerns dictate that there should be some level of approval with respect to proposed investments into the economy, Governor Francis was of the opinion that policies relating to restricted areas may require review to achieve the level of competitiveness needed in the current and developing environment
He concluded that the best long-term interest of Bahamians in a globalised environment is served by policies which embrace all opportunities available, and which force Bahamians to be challenged by the highest standards practiced anywhere. *”A development vision for The Bahamas over the next decade must be based on the principle of openness.”*
The 13th annual Bahamas Business Outlook conference was sponsored earlier this week by The Counsellors Ltd., under the theme *”Looking Out For Global Opportunities”.* The event is recognised for its evaluation and appraisal of the nation’s economic condition.