Minister of Economic Affairs Michael Halkitis said yesterday that the government is very confident that the country’s foreign reserves will remain robust, given the continued growth in the tourism sector and despite the typical drawdown of those reserves that occurs around this time of the year as businesses are “stocking up”.
Halkitis said the regular consultations with the country’s monetary authority, The Central Bank of The Bahamas (CBOB), reveals that the tourism sector has sustained enough growth since the start of the pandemic to ease the worry of significant drawdowns on the reserves.
“We have regular consultations with the Central Bank, that has indicated to us an uptick in the real sector, meaning funds being generated from the economy,” said Halkitis.
“So we’re very confident in those reserves. As you know, during this holiday time there is normally a reduction, sort of a run down around November as businesses are stocking up, but we see the returns on that coming early in the new year, so we’re very confident.”
Central Bank Governor John Rolle said last month that foreign exchange inflows this year have surpassed inflows for the entirety of 2020.
The Central Bank’s most recent monthly economic report revealed that external reserve balances sat at more than $2.7 billion and are likely to end the year at a higher level than in 2020.
Although the reserves were buoyed primarily by the proceeds of government borrowing, last month Rolle said the steady footing of tourism has shown promising signs for the economy.
“As to what’s happening in the economy, in some respect this is the recovery path that was expected, that it will take many months to be back at the seasonal parity of where you would have been in tourism and that is what we’re seeing,” Rolle said last month.
“We’re also seeing that in regards to the foreign exchange flows coming into the country, 2021 has already taken in more inflows than 2020, so that is a sign that tourism’s contribution is picking up and it’s overtaken the total amount that was provided from that sector last year. I think that’s important, to continue to focus on keeping that recovery going, doing all that we can on public health safety and other fronts to keep tourism recovering in a safe fashion.”