Former Minister of State for Finance Kwasi Thompson said yesterday that the Central Bank of The Bahamas’ (CBOB) recent Quarterly Economic Review confirmed that the former Minnis administration’s economic policies were having positive effects on the economy.
The report revealed that the country’s deficit narrowed and revenue collection began to improve last fiscal year.
Thompson said he was pleased by the CBOB report that the economy stabilized in the second quarter of 2021.
“Additionally, it is important to note that the Central Bank has also confirmed ‘that the government’s overall deficit narrowed during the fourth quarter of FY2020/2021, relative to the same quarter for FY2019/2020’,” he said in a statement.
“Underlying this outturn, aggregate revenue increased considerably, led by gains in value added tax receipts, which overshadowed the rise in aggregate expenditure.
“This is again confirmation that the Minnis administration’s recovery plan was taking shape with increased revenue and narrowing of the deficit.”
The CBOB report also revealed that last fiscal year the country’s debt to gross domestic product ratio reached 100.4 percent after the country undertook some of the biggest borrowing and spending in the country’s history in order to soften the economic blow from the COVID-19 pandemic, which brought tourism almost to a complete standstill.
“… National debt – inclusive of contingent liabilities – grew by $406.9 million (4.1 percent) over the previous quarter, and by $1,450.3 million (16.3 percent), on an annual basis, to $10,356.0million,” the CBOB document said.
“As a ratio to GDP, the direct charge increased by an estimated 13.6 percentage points on a yearly basis, to 96.3 percent at end June.
“In addition, the national debt-to-GDP rose to an estimated 100.4 percent, compared to 89.9 percent in the same quarter last year. While extraordinarily elevated because of the contraction in the nominal GDP, the ratios will remain expanded significantly above pre-pandemic levels after the nominal GDP recovers in the near to medium-term.”
Thompson said in his statement that while the country still has far to go in its economic recovery, it has “turned a corner”.
He said both tourism and construction, two key economic indicators for The Bahamas, continue to improve.
Thompson also noted rating agency Moody’s assertion that The Bahamas’ economy is expected to grow by eight percent this year, “four times faster than the anticipated two percent”.
“It is also clear that Moody’s expects our recovery to be based on some of the same policies, initiatives, and legislative reforms of the Minnis administration,” he said.
“We are hopeful that before any major economic changes or tax reform, as was pledged by the Minnis administration, there are proper studies, analysis, diagnosis and consultation. Sudden changes, though well meaning, can derail economic and fiscal recovery. We therefore stand ready to assist to ensure the country’s economy fully recovers.”