The Inter-American Development Bank (IDB) is looking at ways to help The Bahamas close a $200 million gap in its gross domestic product (GDP) by examining the current state of the private sector and identifying ways to reduce structural bottlenecks that are restricting attempts by the private sector to help grow the Bahamian economy.
“You may recall that some time ago the IMF (International Monetary Fund) or the multilateral agencies measured that The Bahamas is actually performing below its potential in terms of its GDP growth rate. Somewhere at about 1.5 percent of GDP or in real numbers somewhere at about 150 million or 200 million dollars below where it could be,” IDB economist Dr. Allan Wright said on the Guardian Radio talk show The Morning Blend yesterday.
The Bahamas is ranked 118 in the World Bank’s Ease of Doing Business Index. The ranking is assessed based on the ease of starting a business, dealing with construction permits, getting electricity, registering property, the ease of getting credit and protections for minority investors.
“When I talk about structural bottlenecks, we’re talking about removing impediments to doing business in The Bahamas, or making it easier to do business in The Bahamas. So, if those factors were taken into consideration, obviously there’s a natural factor in which there must be some level of unemployment within the economy, but if you take that out of it, what the IMF and these multilateral agencies including the IDB are actually saying is that we’re below where we should be by about one and a half percent or $200 million,” Wright said.
“You read about them in the paper every day. The issues with energy, frequent power outages that small businesses would experience, some don’t have a generator. When the light is off can I service my customers, am I able to preserve my inventory, am I able to restock my inventory when I don’t make a sale? All of that is one issue.
“Banks are pretty liquid in The Bahamas as in most Caribbean countries, but because of other issues outside of that you find that small businesses and some medium-sized businesses find it difficult to obtain loans and at a reasonable rate at which they can borrow money, put that money in their business, make a reasonable level of profit or turnover, repay this loan and see themselves above water. Those are two issues.”
The ‘Enhancing Private Sector Competitiveness for The Bahamas’ forum is being held today at IDB house. Wright said the aim of the forum is to drive home the impactful role of the private sector in The Bahamas.
“The role of the private sector in The Bahamas is huge. It contributes to over 65 percent, maybe 70 percent, of the GDP of the economy. It is the largest employer in the economy. So not only are we looking at the state of the sector, but we’re looking at issues which can really enhance their competitiveness. Make it easier for them to do business so that we can close that gap that I mentioned,” he said.