Challenges to economic freedom
A poor trade regime has been identified as a hindrance to economic freedom in The Bahamas–even as the nation is ranked eighth out of 29 South and Central America/Caribbean countries in the 2011 Index of Economic Freedom.
The country received a world ranking of 46 out of 183 countries covered in the international report, produced by the Wall Street Journal and think tank The Heritage Foundation.
“The Bahamas’economic freedom score is 68, making its economy the 46th freest in the 2011 Index,”said the analysis.”Its overall score is 0.7 point better than last year, due primarily to higher scores in fiscal freedom, government spending, and monetary freedom. The Bahamas is ranked 8th out of 29 countries in the South and Central America/Caribbean region, and its overall score is higher than the regional and world averages.”
Even so, there are some issues that still need to be worked on.
“The poor trade regime remains one of the most cumbersome challenges,”the report outlined.”An abundance of tariff and non-tariff barriers continue to create a costly trade burden.”
Ten points were deducted from The Bahamas’trade freedom score, with the index pointing to World Bank information revealing that high tariffs and a”stamp”tax on most imports, high duties that protect a few agricultural items and consumer goods, occasional import bans, and some import licencing and permits have added to the cost of trade in The Bahamas.
“Intrusively bureaucratic approval processes hinder investment freedom and undermine the development of a more vibrant private sector,”noted the report.
The process for obtaining a business licence was highlighted in the report as”not always transparent and straightforward, and officials have considerable discretionary power.”It’s something new ammendments to the Business Licence Act may address going forward.
Still, the index said the regulatory environment remained a favorable one to private sector development, though the report said the judicial process tended to be very slow, with some investors complaining of malfeasance by court officials. It also highlighted issues with unofficial corruption.
“The piracy of software, music, and videos is a problem. Copyright laws are widely ignored, and there is widespread piracy of video and music recordings and broadcasts,”it read.”Illegal drug trafficking and money laundering reportedly involve police, the coast guard, and other government employees. Violent crime has escalated sharply. Even though Internet gambling is illegal, many online gambling sites are reportedly based in The Bahamas, sometimes using Internet cafes as fronts.
“The Bahamas has neither signed nor ratified the U.N. Convention Against Corruption.”
The report said”relatively sound macroeconomic management”has contributed to steady economic growth, interrupted by the recent global economic slowdown.
“In the most recent year, total government spending, including consumption and transfer payments, decreased slightly to 20.9 percent of GDP,”read the index.”Spending priorities have shifted toward capital and unemployment benefits. Lagging tourism and low import duties led to a revenue shortfall and a deteriorating fiscal balance. The fiscal deficit reached 5 percent of GDP and drove debt up to 40 percent of GDP.”