1. The Bahamas: Economic Outlook and Policies
Nassau, February 16, 2017

2. Role of the IMF
“Our key mandate is to promote global economic and financial stability.”
- Christine Lagarde

3. IMF Reviews
Visit member countries to exchange views with the government and the central bank and consider whether there are risks to stability that argue for adjustments in economic or financial policies
Focus on exchange rate, monetary, fiscal, and financial policies, as well as macro-critical structural reforms
Meetings also with other stakeholders, such as parliamentarians and representatives of business, labor unions, and civil society

4. Annual Staff Report
Staff presents a report, which also covers authorities’ views, to the IMF’s Executive Board for discussion
Latest: 2016 Article IV Consultation (July 2016) – Press Release; Staff Report; and Statement by the Executive Director for The Bahamas; staff visit press statement (December 2016)
Available at

5. Multilateral surveillance

6. Economic outlook

7. U.S. growth is bouncing back

8. U.S. growth positive for The Bahamas

9. Shocks: Baha Mar and Recent Hurricanes

10. Policy recommendations (2016 Article IV)
Safeguarding fiscal and external stability
Continued fiscal consolidation: resolute implementation of the current VAT regime with few exemptions, stronger efforts to rationalize spending, far-reaching SOE reform
Structural reforms to enhance competitiveness
Policies towards more jobs and stronger growth
A decisive shift towards implementation of structural policies: strengthening the business environment, raising human capital and reducing skill mismatches, and reducing costs
Growth-friendly fiscal reforms, including investing in infrastructure, in the context of a credible medium-term budgetary framework
Addressing financial sector challenges
Renewed efforts to spur credit growth
Addressing emerging challenges from “de-risking” trends

11. Safeguarding fiscal and external stability

12. VAT revenue has been critical for fiscal consolidation

13. Spending has been higher and volatile

14. Deficits contributing to higher debt
Debt Sustainability Analysis (2016 AIV):
Central government debt has increased, but is expected to stabilize over the medium term
Favorable composition: mostly domestic and long-term, but external financing needs are large
Scenarios: negative Hurricane impact and macro-fiscal stress
Fiscal contingent liabilities: total public sector debt and unfunded pension liabilities

15. Safeguarding fiscal and external stability
Continued fiscal consolidation is critical for rebuilding fiscal and external policy buffers and boosting investor confidence
Priorities include:
Resolute implementation of the current VAT regime with few exemptions
Stronger efforts to rationalize spending
Far-reaching state-owned enterprise reform
Structural reforms to enhance competitiveness

16. Policies towards stronger growth

17. Persistent low growth

18. Structural constraints and high costs

19. Policies towards stronger growth
A decisive shift towards implementation of structural policies
Strengthening the business environment
Raising human capital and reducing skill mismatches
Reducing costs
Growth-friendly fiscal reforms
Investing in infrastructure
Credible medium-term budgetary framework

20. Addressing financial sector challenges

21. De-risking: Caribbean challenge
Drivers:
Post-GFC macro environment and regulatory reforms
AML/CFT concerns and heightened bank risk aversion
Search for potential solutions to address profitability and risk aversion

22. Persistent problem loans

23. NPLs lower credit and real GDP growth

24. Addressing financial sector challenges
Renewed efforts to spur credit growth
Clean up bank balance sheets
Addressing emerging challenges from “de-risking” trends
Emphasis on risk-based supervision
Strong implementation and ensuring compliance with AML/CFT framework
Close communication with stakeholders

25. Policy recommendations (2016 Article IV)
Safeguarding fiscal and external stability
Continued fiscal consolidation: resolute implementation of the current VAT regime with few exemptions, stronger efforts to rationalize spending, far-reaching SOE reform
Structural reforms to enhance competitiveness
Policies towards more jobs and stronger growth
A decisive shift towards implementation of structural policies: strengthening the business environment, raising human capital and reducing skill mismatches, and reducing costs
Growth-friendly fiscal reforms, including investing in infrastructure, in the context of a credible medium-term budgetary framework
Addressing financial sector challenges
Renewed efforts to spur credit growth
Addressing emerging challenges from “de-risking” trends

26. Extra slides

27. Projections