KEY ISSUES Context. Economic activity remains tepid, unemployment is high, and inflation is subdued. The fiscal and external positions have weakened, with reserves declining toward worrisome levels. Non-performing loans (NPLs) are elevated, but the financial system is well capitalized and liquid. Focus of the consultation. Discussions focused on policies to secure fiscal, external, and financial sector stability, and strengthen medium-term growth. Policy recommendations and authorities’ views: • Contain rising central government debt through timely fiscal consolidation. The authorities need to implement comprehensive policies to curb the central government deficit and reduce debt to comfortable levels. • Enhance external stability and bolster growth potential. To improve the external position and rebuild eroding reserves, the authorities should rigorously implement fiscal consolidation and intensify efforts to diversify tourism and exports. Identified structural impediments to growth should be removed expeditiously, with the authorities’ comprehensive growth strategy finalized by the announced deadline of late 2014. • Further strengthen financial supervision. Close monitoring of credit risks is required in view of persistently elevated non-performing loans (NPLs); and financial crisis prevention and resolution frameworks should be promptly strengthened. • The authorities broadly concurred with staff’s assessment and recommendations. They especially recognized the urgent need for budget consolidation and expressed commitment to timely implementation of underpinning reforms, as well as to the finalization of a comprehensive economic diversification and growth strategy. Past surveillance. In concluding the 2012 Article IV consultation, Executive Directors emphasized that The Bahamas’ key policy priority is to strengthen public finances, improve competitiveness, and begin rebuilding the policy buffers eroded in the aftermath of the 2008 crisis. Directors underscored the importance of measures to improve the business environment, develop infrastructure, enhance human capital, and promote economic diversification. They also welcomed the finding of the Financial Sector Stability Assessment that there are no immediate threats to financial stability.
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|Size: ||1.4 MB|
|Publisher: ||INTERNATIONAL MONETARY FUND|
|Date published: || 2014|
|ISBN: ||9781484333716 (DRM-EPUB)|
|Copying:||of 20 selections every 20 days allowed|
|Printing:||of 20 pages every 20 days allowed|
|Read Aloud: ||not allowed|