The Ministry of Finance yesterday stressed that the Bahamian dollar is not facing devaluation, calling recent reports that the government is ‘running out of money’ fake news.
While foreign reserves are projected to deplete as much as $1 billion due to the economic shock from the COVID-19 pandemic, the Ministry of Finance stated it has confidence in The Central Bank of The Bahamas’ (CBOB) measures to protect and increase those reserves.
“The country’s foreign reserves are managed by the capable hands of the Bahamian professionals at The Central Bank of The Bahamas. The Central Bank has an exemplary record that should instill confidence in every Bahamian,” the ministry noted in a statement yesterday.
“Since the COVID-19 crisis, the Central Bank has taken several pre-emptive steps to shore up our reserves and will continue to take necessary action as needed. I echo the Central Bank’s statement today, indicating that monetary policies have already taken into consideration vital local needs and any reports of devaluation threats are entirely misleading and without merit.”
Foreign reserves are currently just above $2 billion.
Earlier this month, CBOB announced several measures to shore up reserves, including the suspension of resident access to exchange for international capital market investments through Bahamas depository receipts and the Investment Currency Market; the suspension of dividend payment approvals for commercial banks; the introduction of more relaxed margins by which commercial banks are allowed to trade foreign exchange; and the move toward the liquidation of certain National Insurance Board (NIB) external investments.
Addressing the matter yesterday, CBOB Governor John Rolle said, “Contrary to the misleading report, 50 percent of our demand liabilities determine the legal floor on external reserves. These move in close sync with reserves because they fund the balances. The Bahamian dollar is not facing devaluation threats. Policies already anticipate vital local needs.”
The ministry’s statement noted that the government will continue to take the necessary steps to stabilize the economy and support the Central Bank in its mandate to preserve the integrity of the Bahamian dollar.
“Our economy has not survived and thrived for so long because of good fortune. As a country, we have historically taken a very prudent approach to fiscal and monetary policy, to protect ourselves in situations like the emergency we face today,” the statement noted.