IMF prepared to provide millions in 'low cost' funding to The Bahamas

IMF prepared to provide millions in 'low cost' funding to The Bahamas

Wednesday, February 05, 2020

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NASSAU, Bahamas, (CMC) —The International Monetary Fund (IMF) says it is prepared to provide The Bahamas with US$200 million at “low cost and without policy conditionality” as it expressed confidence that the country would be able to rebuild a “stronger and more resilient economy”. This after the destruction caused by Hurricane Dorian last September.

The Category 5 storm tore through the archipelago on September 1, killing at least 70 people, with more than 200 missing and damage estimated at US$3.4 billion.

An IMF delegation, led by Fabian Bornhorst, has ended a five-day visit to Nassau “to take stock of economic developments after Hurricane Dorian and prepare for the 2020 Article IV Consultation, planned for March 2020”.

“Our heartfelt sympathies are with the victims of Hurricane Dorian, and with those who face the arduous task of rebuilding their livelihoods. We are confident that the people of The Bahamas will rebuild a stronger and more resilient economy.

“The IMF stands ready to support The Bahamas, including through its emergency financing facilities. Through the IMF's Rapid Financing Instrument, up to US$200 million could be available to The Bahamas at low cost and without policy conditionality,” Bornhorst said.

He acknowledged that the hurricane had devastated parts of Abaco and Grand Bahama, resulting in a sharp fall in tourists.

“Nevertheless, a gradual recovery is already underway, and tourism to other islands of the archipelago is holding up. The still-favourable economic outlook for tourism source countries will support the process.”

Bornhorst said a mild economic contraction is projected in 2020 and that growth is expected to pick up once the infrastructure and tourism capacity is rebuilt.

“The pace of recovery will depend on the implementation of the reconstruction plan; critical elements include the rebuilding of infrastructure, the expeditious processing of construction permits, the availability of labour, and the availability of private and public financing.”

He said the Dr Hubert Minnis Government appropriately activated the escape clause under the Fiscal Responsibility Law following the hurricane and that having met the fiscal target for the financial year 2018-19 “this will allow a temporary deviation from the fiscal consolidation plan to accommodate policies to support the recovery, including through tax waivers and infrastructure reconstruction expenses. “Strengthening social assistance programmes as envisaged in the supplementary budget will support the most vulnerable in rebuilding their livelihoods and those who have lost their jobs.”

Bornhorst said public debt is projected to be higher in the medium term, underscoring the need for a timely return to the fiscal targets, and for accelerating the implementation of structural reforms to realise the economy's growth potential.


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