The outlook for foreign exchange inflows into The Bahamas are good and continue to improve with the growth of tourism, Central Bank of The Bahamas (CBOB) Governor John Rolle told Guardian Business.
His comments came after the release of a CBOB statement on Tuesday, heralding the return of the bank’s depository receipts program (BDR) and the approval of applications to purchase foreign currency through the Investment Currency Market (ICM).
The Bahamas recently received US$247.5 million from the International Monetary Fund’s (IMF) recent general allocation of special drawing rights to strengthen this country’s foreign reserves.
CBOB shortly thereafter revealed that it would reinstitute BDR and ICM October 1.
Rolle said the decision to restart those programs was based more on the country’s improving foreign intake than the IMF allocation.
“Although the IMF SDR allocations provide some important support for the timing of the decision, the Central Bank placed more reliance on the improved resumption of receipts from tourism,” said Rolle.
“These represent expanded foreign exchange inflows through the private sector that can sustain more of the private sector’s demand for external investments.
“The SDRs are a one-off boost to the reserves, but the private flows are an improving steady stream of resources. Our recent statements on the economy spoke to such private sector driven improving conditions for forex (foreign exchange).”
Rolle explained that if the improvements in foreign currency inflows should wane, the bank remains positioned to manage outflows.
He said, though, that the current foreign currency inflow outlook does not warrant a return to such measures.
“… This relaxation of access to foreign exchange does not change our assessments of the protracted travel sector dependent path to a full recovery of the economy,” Rolle said.
“However, access need not remain as restricted as was necessary when tourism was at a virtual shutdown.”
BDR and ICM were stopped for almost a year and a half at the onset of the COVID-19 pandemic, with the CBOB issuing a statement May 4, 2020, suspending access to those two facilities.