By LEANDRA ROLLE
Tribune Chief Reporter
lrolle@tribunemedia.net
AFTER an IMF report warned that the country’s economic growth is expected to slow, Prime Minister Philip “Brave” Davis dismissed those conclusions yesterday, saying his administration does not foresee an economic slowdown just “right yet”.
“That is their predictions,” he told reporters on the sidelines of an event.
“There are some headwinds for us, but it’s not in the economy. It’s the obligation that have been incurred over the years that is holding us back, but we see the observations made by them, but we will ensure… that our economy grows and not slows.”
The IMF’s full 2024 Article IV report on the Bahamian economy highlighted concerns despite hailing The Bahamas’ “remarkable” post-Dorian and post-COVID economic and tourism recovery. According to the report, growth is “expected to slow” to around 1.5 percent — this nation’s historical average — as “capacity constraints in the tourism sector become binding”. This refers to a shortage of new hotel rooms under construction, with supply unable to meet demand.
The IMF also described The Bahamas’ ambition to achieve a 50 percent debt-to-GDP ratio by 2030-2031 as a useful “anchor” for fiscal policy, but expressed scepticism about reaching this target purely through improved tax enforcement and compliance — suggesting that additional measures, including new or increased taxes, might be necessary.
The Fund further warned that the government’s “public debt and gross financing needs” remain high, creating a “rollover risk” — the danger that a major institutional investor might refuse to refinance existing debt and instead demand full repayment of the principal owed.
Additionally, the report revealed that as of October 2024, the government had reached its legal borrowing limit with the Central Bank, a situation stemming from increased reliance on that funding source while private capital is deployed elsewhere.
When asked about this yesterday, Prime Minister Davis responded: “Again, that is another issue between the fiscal authority and the monetary authority and we’re dealing with that as well.”
