Central Bank seeking to relax exchange controls on real estate transactions
The Central Bank of The Bahamas is looking to further relax exchange controls, this time on how private real estate transactions on residential properties are processed and approved.
Central Bank Governor John Rolle said it’s a reform the bank hopes to complete this year.
“One of the areas we would like to see some reforms possibly later this year is the interaction between exchange control and the real estate market, in terms of how we process and approve those types of transactions. It is a conversation we are having with the Ministry of Finance because from a data point of view we still need to know what’s happening,” Rolle said at a media briefing yesterday.
“So, there are some points in the system where improving the information collections could serve our purpose and it could allow us to allow more of the private transactions in the real estate space to perhaps take place without as much of the exchange control interaction.”
This continued push to reform exchange controls follows a reduction in the buying and selling rates for foreign currencies implemented by CBOB late last year, that has already resulted in a significant increase in foreign currency proceeds.
Rolle said the goal is to ensure the reforms are implemented at a pace at which the private sector can absorb the change.
“What we have recently done, for example, this is more access by Bahamians to making investments abroad, portfolio investments, there is some amount of access of local businesses to retaining some of their foreign currency proceeds in deposit accounts,” he said.
“We have seen more use of the investment currency, I can’t quote a number but it is up significantly, considerably from previous years. And there’s also increased use of the other facilities. Even with those we haven’t seen any interference with the net inflows to the foreign reserves.”
The Monthly Economic and Financial Developments (MEFD) report for March released yesterday by CBOB showed that on a net basis, the increase in foreign reserves during the first quarter of 2019 benefited from almost $300 million in net flows though the private sector, compared to the first quarter of 2018, when commercial banks’ total foreign exchange purchased from the private sector rose by 14 percent to about $1.5 billion.
“From these receipts, commercial banks fully accommodated higher spending by businesses and consumers on goods and services from abroad, and then sold a larger residual to the central bank, that funded the increase in external reserves. That said, the seasonal growth in foreign reserves was lower than in the first quarter of 2018 because of the public sector’s influence. In 2018 there was notable net foreign currency borrowing by the government, which contributed to some of the rise in reserves,” Rolle said addressing the March MEFD.
“This year, the government made a net purchase of foreign exchange from the central bank. At the end of March the external reserves were around $1.4 billon. As we expected, these are lower than at the same point in 2018. This is because the government continued to draw down on the funds that it borrowed at the end of 2017, and because of two bulky transactions in 2018 when the Grand Bahama hotel was purchased and when the Nassau Airport Development Company refinanced some U.S. dollar debt with local currency.”
Paige started working as a business reporter in August 2016.
Education: Palm Beach Atlantic University in 2006 with a BA in Radio and Television News