## 2025. Inflation has decelerated (1.3 percent in July 2025), partly reflecting lower global energy

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---

### Recent developments
- Inflation fell from a peak of 7.1 percent y/y in July 2022 to 1.3 percent by July 2025, driven by lower global energy and goods prices and reductions in local electricity tariffs.
- Real GDP growth in the first half of 2025 was 4.7 percent y/y, with construction contributing nearly 2 percentage points, boosted by commercial projects in tourism and energy.
- Cruise sea arrivals increased by 11.6 percent y/y until October 2025; stayover tourists fell by -1.9 percent y/y until October 2025.
- Unemployment was 9.3 percent in Q2 2025, up relative to 2024 in part due to increased labor force participation.
- Central government debt is around 74 percent of GDP in 2025, with downward revisions to historical debt-to-GDP reflecting GDP series changes.
- FY2024/25 recorded another primary surplus; the fiscal deficit narrowed to 0.5 percent of GDP in FY2024/25.
- Financing developments:
  - An IDB-supported debt-for-ocean-conservation swap raised US$300 million.
  - A US$1.1 billion Eurobond issued in June 2025 enabled a buyback of US$0.8 billion in more expensive external obligations.
  - The debt-for-nature swap (November 2024) lowered debt service by US$242 million through 2030.
  - The Eurobond issuance and buyback are estimated to lower scheduled principal repayments by about $451 million over the next three years and extend the average maturity of outstanding Eurobonds by 2.1 years.

### Tourism sector developments (Box 1)
- Stayover visitors account for around 90 percent of tourism expenditure (or 28 percent of GDP).
- The Bahamas’ share in the Caribbean’s stayover tourism market has been stable at around 14 percent, with about 80 percent of stayover tourists from the U.S.
- The Bahamas leads the cruise segment with around 40 percent of sea arrivals in the Caribbean going to The Bahamas.
- Hotel capacity constraints are binding in peak periods; short-term vacation rentals are growing and public efforts are increasing promotion in other markets and upgrading airport capacity.

### Outlook and risks
- Growth and inflation projections:
  - Growth is expected to be around 2.8 percent in 2025, then gradually slow toward 1½ percent (the assessed potential growth rate) over the medium term.
  - Headline inflation is projected to settle at around 2 percent over the medium term.
  - The current account deficit is expected to narrow to about 6 percent of GDP over the medium term.
- Risks (broadly balanced):
  - Downside risks: a potential global slowdown with adverse impact on tourism; natural disasters and more frequent extreme weather events.
  - Upside risks: greater-than-expected effects of public and private infrastructure projects linked to tourism and the electricity sector reform; alleviation of tourism capacity constraints could raise actual and potential growth.
- Policy response in a downside scenario:
  - Provide time-bound and well-targeted countercyclical policy support, including targeted assistance to vulnerable households.
  - Accompany support with a fiscal plan to return to compliance with the debt-to-GDP target under a clear timeframe.
  - Accelerate supply-side reforms (e.g., reduce barriers to businesses) and enhance financial stability vigilance, particularly in the domestic banking sector.

### Executive Board assessment and policy recommendations
- Fiscal consolidation and reform priorities:
  - Continue fiscal consolidation to reduce fiscal vulnerabilities; the FY2025/26 budget targets an overall surplus.
  - Prioritize revenue-enhancing and expenditure-optimizing measures to achieve the authorities’ 50 percent of GDP target for central government debt. Suggested measures include introducing corporate and personal income taxes, rationalizing tax expenditures, raising the standard VAT rate, and reducing transfers to SOEs.
  - Use fiscal space to invest in priority areas, such as education and resilient infrastructure.
- Fiscal institutions and risk management:
  - Improve fiscal reporting and advance adoption of an accrual-based accounting system for the budget to enhance fiscal transparency.
  - Enhance the institutional framework for PPPs and accurately assess and mitigate fiscal risks from SOEs.
  - Supplement planned civil service pension reform with more holistic changes to address actuarial imbalances.
  - Continue efforts to reduce debt rollover risks.
- Financial sector policies:
  - Preserve financial stability as bank credit to the private sector increases; monitor risks from banks’ exposure to the sovereign.
  - Strengthen oversight of nonbanks and close data gaps; operationalize real estate price indices.
  - Advance planned legal reforms to improve resolution frameworks and safety nets.
  - Reduce the ceiling on central bank advances to the government to support the exchange rate peg; maintain efforts to implement the 2024 DARE Act.
  - Continue enhancing risk-based AML/CFT supervision and promote financial inclusion.
- Supply-side and resilience policies:
  - Foster economic resilience and invest in human and physical capital to ease supply-side constraints to growth.
  - Raise productivity and complement fiscal consolidation to help narrow external imbalances.
  - Alleviate tourism capacity constraints through ongoing infrastructure projects in hotels and airports.
  - Reduce vulnerable employment and informality by cutting red tape for businesses, strengthening education, and expanding training and upskilling opportunities.
  - Pursue trade diversification to strengthen resilience and reduce import costs; complement with greater product market competition.
  - Continue energy sector reform to improve cost and reliability of electricity.
  - Enhance disaster risk management and invest in climate resilience.
  - Address housing affordability by investing in social housing and refining rental market regulations.

### Key statistics (selected)
- Real GDP (annual % change):
  - 2023 3.0; 2024 3.4; 2025 2.8; 2026 2.2; 2027 1.9; 2028 1.8; 2029 1.6; 2030 1.5.
- Unemployment rate (%):
  - 2023 10.2; 2024 8.4; 2025 9.5; 2026 9.4; 2027 9.2; 2028 9.0; 2029 9.0; 2030 9.0.
- Current account balance (% of GDP):
  - 2023 -7.0; 2024 -7.6; 2025 -7.8; 2026 -7.5; 2027 -7.3; 2028 -6.8; 2029 -6.5; 2030 -6.1.
- CPI inflation (%, period average):
  - 2023 3.1; 2024 0.4; 2025 0.6; 2026 1.2; 2027 1.8; 2028 1.8; 2029 2.0; 2030 2.0.
- CPI inflation (%, end of period):
  - 2023 1.9; 2024 0.0; 2025 0.7; 2026 1.5; 2027 1.8; 2028 1.9; 2029 2.0; 2030 2.0.
- Fiscal overall balance (% of GDP)1/:
  - 2023 -3.7; 2024 -1.2; 2025 -0.5; 2026 -0.5; 2027 -0.4; 2028 -0.3; 2029 0.1; 2030 0.2.
- Fiscal primary balance (% of GDP)1/:
  - 2023 0.3; 2024 2.7; 2025 3.7; 2026 3.6; 2027 3.6; 2028 3.7; 2029 3.8; 2030 3.8.
- Central government debt (% of GDP)1/:
  - 2023 78.3; 2024 73.8; 2025 74.1; 2026 72.7; 2027 71.4; 2028 69.9; 2029 67.9; 2030 65.8.
- Gross international reserves (end period; millions of U.S. dollars):
  - 2024: 2,517; 2025 (Est.): 2,633; 2026: 2,810; 2027: 2,941; 2028: 3,078; 2029: 3,202; 2030: 3,339.
- Reserves adequacy:
  - International reserves are adequate at 143 percent of the IMF’s ARA metric.
  - Reserves in months of next year's G&S imports: 2024: 4.3; 2025 (Est.): 4.4.

### Macroeconomic outlook and risks (supplementary)
- Growth momentum maintained in the first three quarters of 2025.
- Private sector credit is growing at around 6 percent y/y.
- In the October 2025 WEO downside risk scenario, The Bahamas’ GDP growth could be 1-2 percent lower in 2026-2027, with an increase in the current account deficit and adverse impacts on the fiscal deficit and the debt-GDP ratio.
- Authorities’ stated priorities in a downside global scenario: prioritize spending on social programs while aiming to safeguard fiscal revenues and favorable financing options.

### Financial sector health and policy
- Bank soundness and credit:
  - Risk-based capital ratio was 30.7 percent in September 2025.
  - Bank profitability is strong.
  - Nonperforming loans are 5.2 percent of loans, with banks provisioned at 86 percent of that amount.
  - Total loans to households and corporates are relatively low; corporate loans are growing relatively quickly.
  - Banks’ holdings of government securities increased from about 16 percent of bank assets in pre-pandemic years to nearly 19 percent of bank assets in 2024. Slightly less than a half of these total holdings correspond to Treasury Bills, and the rest to bonds, as of 2024.
- Systemic risks and resilience:
  - Systemic financial stability risks are moderate.
  - Central Bank stress tests indicate banks are broadly resilient to even severe adverse shocks.
  - Insurance sector appears healthy but faces material exposure to natural disasters.
- Macroprudential and data priorities:
  - Financial Stability Council became operational in February 2025; it should adopt a time-bound plan to operationalize real-estate price indices and loan-level data to calibrate borrower-based macroprudential tools.
- Regulatory reforms and digital finance:
  - Implementation of the 2024 DARE Act is essential; it upgraded the regulatory framework for digital assets (extended scope, increased investor protections and controls, requirements for stablecoin issuers, strengthened AML/CFT requirements).
  - SandDollar statistics as of end-2024:
    - Represented about 0.4 percent of total currency in circulation.
    - Consumer wallets: 133,481 users by December 2024, representing about a third of the country’s population and an annual increase of 12.2 percent.
    - Merchant wallets: expanded by 3.2 percent to 2,034 users over the same timeframe.
- Financial sector policy recommendations:
  - Maintain supervisory vigilance and high lending standards.
  - Address data gaps through the Financial Stability Council and publish time-bound plans for real-estate and loan-level data.
  - Enact legal changes to strengthen crisis preparedness and safety nets.
  - Continue implementing the DARE Act and provide guidance to digital assets firms.
  - Lower the ceiling on central bank advances to the government to support the exchange rate peg.

### Fiscal policy findings and recommendations
- Recent fiscal performance:
  - Reduction in the fiscal deficit has been largely underpinned by higher tourism-related revenues and expenditure discipline.
  - Revenue gains from higher fees for business licenses and immigration applications, increases in the departure tax, and tax administration gains (e.g., from digitalization).
  - Current spending, transfers to public corporations, and capital spending have all been contained.
- FY2025/26 budget and measures:
  - FY2025/26 budget targets an overall fiscal surplus.
  - New revenue from the Domestic Minimum Top-Up Tax (DMTT) on large corporations is expected to yield around 0.7 percent of GDP.
  - The 2025 public service salary review will increase the wage bill as a share of GDP; the government plans a modest increase in investment spending.
  - Budget lowers the VAT for basic goods and provides for customs duty exemptions on certain goods; these measures support vulnerable households but could have been better targeted.
  - Mid-January 2026 government removal of VAT on unprepared food (effective April 1) plus property tax relief measures might lower revenues by around 0.2 percent of GDP annually (preliminary basis), especially from FY2026/27 onwards.
- Debt target and required measures:
  - Staff estimates suggest meeting the authorities’ 50 percent of GDP target for central government debt in FY2030/31 will require additional policy measures.
  - Recommended revenue and expenditure measures (estimated annual yields by FY2029/30 unless stated):
    - Replace the business license fee with a new corporate income tax (estimated annual yield of 1.3 percent of GDP).
    - Introduce a progressive personal income tax (estimated annual yield of 2.0 percent of GDP).
    - Reduce tax expenditures (notably exemptions to the VAT and customs duties), yielding around 0.2 percent of GDP.
    - Eliminate the ceiling on the real property tax, yielding 0.1 percent of GDP.
    - Raise the standard VAT rate to around 15 percent, leading to about 2 percent of GDP in additional revenue.
    - Improve SOE operations and reduce fiscal transfers to these entities (especially health and water enterprises), which could reduce current expenditure by nearly 1 percent of GDP.
  - These measures could create fiscal space to raise spending on education, social protection, and disaster-hardening infrastructure by around 2.2 percent of GDP over the medium term.
  - Sequencing: frontload reductions in SOE transfers and measures on tax expenditures, property tax, and VAT rate; corporate and personal income tax introduction requires public support and administrative capacity.
  - Delaying implementation risks missing fiscal and debt targets.
- Fiscal institutions and debt management:
  - Plans to adopt accrual-based accounting for the budget to improve transparency and decision-making.
  - Consider changes to the PFM Act to incorporate correction mechanisms with predefined triggers, timelines, and corrective measures to automatically raise fiscal balance targets when debt-to-GDP moves above targeted path.
  - Monitor and publish SOEs’ audited financial statements, especially given government guarantees of SOEs’ debt.
  - Authorities are mobilizing more domestic financing at longer maturities, refining competitive bidding, broadening investor base, and aiming to develop a repo market.
- Pension and PPP policy:
  - The civil service pension unfunded liability exceeds 15 percent of GDP.
  - Planned reform to convert the scheme over time into a defined contribution system should be complemented by broader changes: index retirement age to life expectancy and transition all public servants over time while honoring accrued benefits.
  - A 2025 IDB report finds meeting investment needs in healthcare, roadworks, airports, water networks, and renewable energy will require over 3 percent of GDP in additional annual investment by 2030.
  - Strengthen institutional framework for PPPs: clear procurement process, dedicated fiscal risk management, proper budgeting/accounting/reporting standards, and consistent enabling legal framework.

### AML/CFT and financial integrity actions
- Actions underway to increase capability to investigate and prosecute money laundering and to ensure allocation of appropriate resources to risk-based AML/CFT supervision.
- A review of the country’s AML/CFT framework by the Caribbean Financial Action Task Force is planned for late 2026.
- Authorities are preparing for the 2026 Financial Action Task Force (FATF) evaluation and are using gap analysis to ensure digital-asset firms adapt to the 2024 DARE Act requirements.
- Staff appraisal priorities:
  - Strengthen technical capacity across financial supervisors.
  - Enhance stress-testing frameworks and close data gaps (notably for climate risk assessment and nonbank oversight).
  - Operationalize real estate price indices to improve risk monitoring.
  - Maintain implementation momentum on the 2024 DARE Act and prepare comprehensively for the Caribbean FATF evaluation planned for late 2026.

### Data, FSAP follow-up, and capacity development
- Private sector credit:
  - By end-2024, private sector credit was at 39 percent of GDP, 5 percentage points below 2019 levels and 27 percentage points below the 2009 peak.
  - Credit has rebounded since 2022, supported by post-disaster and post-pandemic recoveries and strong lending to firms in transportation, distribution, professional services, and tourism.
- Financial soundness indicators (selected):
  - Nonperforming loans to total gross loans: 2024: 5.5.
  - Provisions-to-NPLs: 2024: 95.0.
  - Return on assets (ROA): 2024: 4.2.
  - Regulatory capital to risk-weighted assets (percent): 2024: 34.7.
  - Liquid asset to total assets (percent): 2024: 37.6.
  - Return on equity (percent): 2024: 23.2.
- Data adequacy assessment: B (The data provided to the Fund have some shortcomings but are broadly adequate for surveillance).
- Data gaps and planned actions:
  - Authorities are completing data collection to launch a new household survey, after which they plan to rebase the CPI.
  - Staff continue to support authorities with technical assistance on IIP and balance of payments, and additional capacity development for government finance statistics.
  - Central Bank staff has begun preliminary work on constructing a real estate price index; data sourcing is ongoing.

*International Monetary Fund staff report for The Bahamas, January 20, 2026.*

### 2025. Inflation has decelerated (1.3 percent in July 2025), partly reflecting lower global energy

### 1bhsea2026001-source-pdf - 2025. Inflation has decelerated (1.3 percent in July 2025), partly reflecting lower global energy

### Recent developments
- Inflation fell from a peak of 7.1 percent y/y in July 2022 to 1.3 percent by July 2025, driven by lower global energy and goods prices and reductions in local electricity tariffs.  
- Real GDP growth in the first half of 2025 was 4.7 percent y/y, with construction contributing nearly 2 percentage points, boosted by commercial projects in tourism and energy.  
- Cruise sea arrivals increased by 11.6 percent y/y until October 2025; stayover tourists fell by -1.9 percent y/y until October 2025.  
- Unemployment was 9.3 percent in Q2 2025, up relative to 2024 in part due to increased labor force participation.  
- Central government debt is around 74 percent of GDP in 2025, with downward revisions to historical debt-to-GDP reflecting GDP series changes.  
- FY2024/25 recorded another primary surplus; the fiscal deficit narrowed to 0.5 percent of GDP in FY2024/25.  
- Financing developments: an IDB-supported debt-for-ocean-conservation swap raised US$300 million; a US$1.1 billion Eurobond issued in June 2025 enabled a buyback of US$0.8 billion in more expensive external obligations. The debt-for-nature swap (November 2024) lowered debt service by US$242 million through 2030. The Eurobond issuance and buyback are estimated to lower scheduled principal repayments by about $451 million over the next three years and extend the average maturity of outstanding Eurobonds by 2.1 years.

### Tourism sector developments (Box 1)
- Stayover visitors account for around 90 percent of tourism expenditure (or 28 percent of GDP).  
- The Bahamas’ share in the Caribbean’s stayover tourism market has been stable at around 14 percent, with about 80 percent of stayover tourists from the U.S.  
- The Bahamas leads the cruise segment with around 40 percent of sea arrivals in the Caribbean going to The Bahamas.  
- Hotel capacity constraints are binding in peak periods; short-term vacation rentals are growing and public efforts are increasing promotion in other markets and upgrading airport capacity.

### Outlook and risks
- Growth is expected to be around 2.8 percent in 2025, then gradually slow toward 1½ percent (the assessed potential growth rate) over the medium term.  
- Headline inflation is projected to settle at around 2 percent over the medium term.  
- The current account deficit is expected to narrow to about 6 percent of GDP over the medium term.  
- Risks are broadly balanced:
  - Downside risks: a potential global slowdown with adverse impact on tourism; natural disasters and more frequent extreme weather events.
  - Upside risks: greater-than-expected effects of public and private infrastructure projects linked to tourism and the electricity sector reform; alleviation of tourism capacity constraints could raise actual and potential growth.

### Executive Board assessment and policy recommendations
- Fiscal consolidation and reform priorities:
  - Continue fiscal consolidation to reduce fiscal vulnerabilities; the FY2025/26 budget targets an overall surplus.
  - Prioritize revenue-enhancing and expenditure-optimizing measures to achieve the authorities’ 50 percent of GDP target for central government debt. Suggested measures include introducing corporate and personal income taxes, rationalizing tax expenditures, raising the standard VAT rate, and reducing transfers to SOEs.
  - Use fiscal space to invest in priority areas, such as education and resilient infrastructure.
- Fiscal institutions and risk management:
  - Improve fiscal reporting and advance adoption of an accrual-based accounting system for the budget to enhance fiscal transparency.
  - Enhance the institutional framework for PPPs and accurately assess and mitigate fiscal risks from SOEs.
  - Supplement planned civil service pension reform with more holistic changes to address actuarial imbalances.
  - Continue efforts to reduce debt rollover risks.
- Financial sector policies:
  - Preserve financial stability as bank credit to the private sector increases; monitor risks from banks’ exposure to the sovereign.
  - Strengthen oversight of nonbanks and close data gaps; operationalize real estate price indices.
  - Advance planned legal reforms to improve resolution frameworks and safety nets.
  - Reduce the ceiling on central bank advances to the government to support the exchange rate peg; maintain efforts to implement the 2024 DARE Act.
  - Continue enhancing risk-based AML/CFT supervision and promote financial inclusion.
- Supply-side and resilience policies:
  - Foster economic resilience and invest in human and physical capital to ease supply-side constraints to growth.
  - Raise productivity and complement fiscal consolidation to help narrow external imbalances.
  - Alleviate tourism capacity constraints through ongoing infrastructure projects in hotels and airports.
  - Reduce vulnerable employment and informality by cutting red tape for businesses, strengthening education, and expanding training and upskilling opportunities.
  - Pursue trade diversification to strengthen resilience and reduce import costs; complement with greater product market competition.
  - Continue energy sector reform to improve cost and reliability of electricity.
  - Enhance disaster risk management and invest in climate resilience.
  - Address housing affordability by investing in social housing and refining rental market regulations.

### Key statistics (Table 1: The Bahamas: Selected Economic Indicators)
- Real GDP (annual % change): 2023 3.0; 2024 3.4; 2025 2.8; 2026 2.2; 2027 1.9; 2028 1.8; 2029 1.6; 2030 1.5.  
- Unemployment rate (%): 2023 10.2; 2024 8.4; 2025 9.5; 2026 9.4; 2027 9.2; 2028 9.0; 2029 9.0; 2030 9.0.  
- Current account balance (% of GDP): 2023 -7.0; 2024 -7.6; 2025 -7.8; 2026 -7.5; 2027 -7.3; 2028 -6.8; 2029 -6.5; 2030 -6.1.  
- CPI inflation (%, period average): 2023 3.1; 2024 0.4; 2025 0.6; 2026 1.2; 2027 1.8; 2028 1.8; 2029 2.0; 2030 2.0.  
- CPI inflation (%, end of period): 2023 1.9; 2024 0.0; 2025 0.7; 2026 1.5; 2027 1.8; 2028 1.9; 2029 2.0; 2030 2.0.  
- Fiscal overall balance (% of GDP)1/: 2023 -3.7; 2024 -1.2; 2025 -0.5; 2026 -0.5; 2027 -0.4; 2028 -0.3; 2029 0.1; 2030 0.2.  
- Fiscal primary balance (% of GDP)1/: 2023 0.3; 2024 2.7; 2025 3.7; 2026 3.6; 2027 3.6; 2028 3.7; 2029 3.8; 2030 3.8.  
- Central government debt (% of GDP)1/: 2023 78.3; 2024 73.8; 2025 74.1; 2026 72.7; 2027 71.4; 2028 69.9; 2029 67.9; 2030 65.8.

*International Monetary Fund staff report for The Bahamas, January 20, 2026.*

### 3.1 percent). International reserves are adequate at 143 percent of the IMF’s ARA metric.

### 3.1 percent). International reserves are adequate at 143 percent of the IMF’s ARA metric.

### Macroeconomic outlook and risks
- International reserves are adequate at 143 percent of the IMF’s ARA metric.
- Growth and inflation
  - Growth momentum maintained in the first three quarters of 2025.
  - Growth is expected to slow toward 1½ percent over the medium term.
  - Headline inflation is projected to settle at around 2 percent over the medium term.
  - Private sector credit is growing at around 6 percent y/y.
- External and fiscal balances
  - The current account deficit should narrow to about 6 percent of GDP, with increased tourism and a smaller fiscal deficit.
- Downside risks
  - Tourism slowdown, tighter global financial conditions, natural disasters, or cyber threats.
  - In the October 2025 WEO downside risk scenario, The Bahamas’ GDP growth could be 1-2 percent lower in 2026-2027, with an increase in the current account deficit and adverse impacts on the fiscal deficit and the debt-GDP ratio.
- Upside risks
  - Source-country diversification in tourism, faster growth in short-term vacation rentals, greater-than-expected impact from public and private infrastructure projects.
- Policy response in a downside scenario
  - Provide time-bound and well-targeted countercyclical policy support, including targeted assistance to vulnerable households.
  - Accompany support with a fiscal plan to return to compliance with the debt-to-GDP target under a clear timeframe.
  - Accelerate supply-side reforms (e.g., reduce barriers to businesses) and enhance financial stability vigilance, particularly in the domestic banking sector.
- Authorities’ views on outlook and risks
  - Authorities concurred that capacity constraints weigh on stayover tourism but highlighted upside risks from tourism and energy investments.
  - In a downside global scenario, authorities would prioritize spending on social programs while aiming to safeguard fiscal revenues and favorable financing options.

### Financial sector health and policy
- Bank soundness and credit
  - The risk-based capital ratio was 30.7 percent in September 2025, almost double the regulatory minimum.
  - Bank profitability is strong.
  - Nonperforming loans are 5.2 percent of loans, with banks provisioned at 86 percent of that amount.
  - Total loans to households and corporates are relatively low; corporate loans are growing relatively quickly.
  - Banks’ holdings of government securities increased from about 16 percent of bank assets in pre-pandemic years to nearly 19 percent of bank assets in 2024. Slightly less than a half of these total holdings correspond to Treasury Bills, and the rest to bonds, as of 2024.
- Systemic risks and resilience
  - Systemic financial stability risks are moderate.
  - Central Bank stress tests indicate banks are broadly resilient to even severe adverse shocks.
  - Insurance sector appears healthy but faces material exposure to natural disasters.
  - Credit unions governance improvements underway; more oversight needed for nonbanks.
- Macroprudential and data priorities
  - Financial Stability Council became operational in February 2025; it should adopt a time-bound plan to operationalize real-estate price indices and loan-level data to calibrate borrower-based macroprudential tools.
  - Supervisory vigilance needed as credit expands; broaden investor base for public debt to mitigate banks’ sovereign exposure risks.
- Regulatory reforms and digital finance
  - Legal improvements drafted to strengthen resolution frameworks and provide backstop funding mechanisms to the deposit insurance corporation.
  - Central Bank is incorporating climate risks into stress-testing, has released regulatory guidelines for fintech testing, and is aiming to improve cybersecurity resilience.
  - Implementation of the 2024 DARE Act is essential; it upgraded the regulatory framework for digital assets (extended scope, increased investor protections and controls, requirements for stablecoin issuers, strengthened AML/CFT requirements).
  - The Central Bank completed a consultation on agency banking; SandDollar is slowly expanding access to underserved communities.
  - Fast payment systems initiative launched; continued investment needed in financial literacy, telecommunications, and electricity infrastructure.
- Policy recommendations for financial sector
  - Maintain supervisory vigilance and high lending standards.
  - Address data gaps through the Financial Stability Council and publish time-bound plans for real-estate and loan-level data.
  - Enact legal changes to strengthen crisis preparedness and safety nets.
  - Continue implementing the DARE Act and provide guidance to digital assets firms.
  - Lower the ceiling on central bank advances to the government to support the exchange rate peg.

### Fiscal policy findings and recommendations
- Recent fiscal performance
  - Reduction in the fiscal deficit has been largely underpinned by higher tourism-related revenues and expenditure discipline.
  - Revenues also boosted by higher fees for business licenses and immigration applications, increases in the departure tax, and tax administration gains (e.g., from digitalization).
  - Current spending, transfers to public corporations, and capital spending have all been contained.
- FY2025/26 budget and measures
  - FY2025/26 budget targets an overall fiscal surplus.
  - New revenue from the Domestic Minimum Top-Up Tax (DMTT) on large corporations is expected to yield around 0.7 percent of GDP.
  - The 2025 public service salary review will increase the wage bill as a share of GDP; the government plans a modest increase in investment spending.
  - Budget lowers the VAT for basic goods and provides for customs duty exemptions on certain goods; these measures support vulnerable households but could have been better targeted.
  - Mid-January 2026 government removal of VAT on unprepared food (effective April 1) plus property tax relief measures might lower revenues by around 0.2 percent of GDP annually (preliminary basis), especially from FY2026/27 onwards.
- Debt target and required measures
  - Staff estimates suggest meeting the authorities’ 50 percent of GDP target for central government debt in FY2030/31 will require additional policy measures.
  - Public debt is declining as a ratio of GDP but the risk of sovereign stress is moderate.
  - Recommended revenue and expenditure measures (estimated annual yields by FY2029/30 unless stated):
    - Replace the business license fee with a new corporate income tax (estimated annual yield of 1.3 percent of GDP).
    - Introduce a progressive personal income tax (estimated annual yield of 2.0 percent of GDP).
    - Reduce tax expenditures (notably exemptions to the VAT and customs duties), yielding around 0.2 percent of GDP.
    - Eliminate the ceiling on the real property tax, yielding 0.1 percent of GDP.
    - Raise the standard VAT rate to around 15 percent, leading to about 2 percent of GDP in additional revenue.
    - Improve SOE operations and reduce fiscal transfers to these entities (especially health and water enterprises), which could reduce current expenditure by nearly 1 percent of GDP.
  - These measures could also create fiscal space to raise spending on education, social protection, and disaster-hardening infrastructure by around 2.2 percent of GDP over the medium term.
  - Sequencing: frontload reductions in SOE transfers and measures on tax expenditures, property tax, and VAT rate; corporate and personal income tax introduction requires public support and administrative capacity.
  - Delaying implementation risks missing fiscal and debt targets.
- Fiscal institutions and debt management
  - Efforts underway: increase domestic financing and mitigate rollover risks by issuing medium to long-term securities concentrated in limited maturities; use liability management operations to shape preferred debt portfolio.
  - Plans to adopt accrual-based accounting for the budget to improve transparency and decision-making.
  - Consider changes to the PFM Act to incorporate correction mechanisms with predefined triggers, timelines, and corrective measures to automatically raise fiscal balance targets when debt-to-GDP moves above targeted path.
  - Monitor and publish SOEs’ audited financial statements, especially given government guarantees of SOEs’ debt.
  - Authorities are mobilizing more domestic financing at longer maturities, refining competitive bidding, broadening investor base, and aiming to develop a repo market.
- Pension and PPP policy
  - The civil service pension unfunded liability exceeds 15 percent of GDP.
  - Planned reform to convert the scheme over time into a defined contribution system should be complemented by broader changes: index retirement age to life expectancy and transition all public servants over time while honoring accrued benefits.
  - Increased use of public-private partnerships (PPPs) should be paired with stronger PPP oversight and governance.
    - A 2025 IDB report finds meeting investment needs in healthcare, roadworks, airports, water networks, and renewable energy will require over 3 percent of GDP in additional annual investment by 2030.
    - Strengthen institutional framework to clarify risk-sharing, monitor and enforce private partners’ obligations, ensure transparent fiscal reporting, and quantify/report potential liabilities associated with energy sector investments.
    - PPP governance checklist: clear procurement process, dedicated fiscal risk management, proper budgeting/accounting/reporting standards, and consistent enabling legal framework.
- Authorities’ views on fiscal policy
  - Authorities committed to fiscal and debt targets and strengthening fiscal institutions.
  - Immediate priority to enhance revenues under the current tax regime through administrative and compliance measures to improve collection from VAT and other taxes.
  - Continued engagement with the OECD Inclusive Framework to secure transitional “qualified” status for the DMTT.
  - Authorities agreed on the need to reduce transfers to SOEs and to reinforce PPP institutional framework.

*THE BAHAMAS — INTERNATIONAL MONETARY FUND.*

### 25. Actions are being taken to address money laundering threats and vulnerabilities

### 25. Actions are being taken to address money laundering threats and vulnerabilities identified in the 2024 National Risk Assessment

### Key actions and timelines
- Actions underway to increase capability to investigate and prosecute money laundering and to ensure allocation of appropriate resources to risk-based AML/CFT supervision.
- A review of the country’s AML/CFT framework by the Caribbean Financial Action Task Force is planned for late 2026.
- Authorities are preparing for the 2026 Financial Action Task Force (FATF) evaluation and are using gap analysis to ensure digital-asset firms adapt to the 2024 DARE Act requirements.
- Continued efforts to implement the 2024 DARE Act are essential.

### Authorities’ views on financial stability and supervision
- Authorities assess financial stability risks as remaining low.
- They view domestic banks’ lending standards as prudent, supported by active use of credit bureau information.
- Recovery in bank credit is seen as consistent with the economic outlook and reduction of credit risk.
- Authorities recognize the importance of monitoring potential risks from banks’ sovereign exposure but do not regard this as a major concern.
- Need identified to:
  - Strengthen stress testing capacity.
  - Close data gaps, including to evaluate climate risks.
  - Enhance oversight of nonbanks.
  - Upgrade technical capacity across financial supervisors.
- The Financial Stability Council has helped improve coordination.

### Payments modernization, financial inclusion, and digital currency
- Authorities remain committed to modernization of the domestic payments system and boosting financial inclusion.
- SandDollar (central bank digital currency) statistics as of end-2024:
  - Represented about 0.4 percent of total currency in circulation.
  - Consumer wallets: 133,481 users by December 2024, representing about a third of the country’s population and an annual increase of 12.2 percent.
  - Merchant wallets: expanded by 3.2 percent to 2,034 users over the same timeframe.
- Agency banking and basic banking were presented for public consultation in 2025 and intended for implementation in 2026.
- A suite of legislative reforms proposed by the Central Bank to strengthen the regulatory framework, depositor protection, and financial system resilience were published for public consultation in 2025 and planned for presentation at parliament in 2026.

### Staff appraisal: financial sector and AML/CFT priorities
- Continue to aim financial sector policies at preserving financial stability as bank credit to the private sector increases.
- Priorities include:
  - Monitor risks from banks’ exposure to the sovereign.
  - Strengthen oversight of nonbanks.
  - Close data gaps (including operationalizing real estate price indices).
  - Improve resolution frameworks and safety nets via planned legal reforms.
  - Reduce the ceiling on central bank advances to the government to support the exchange rate peg.
  - Maintain efforts to implement the 2024 DARE Act.
  - Enhance risk-based AML/CFT supervision and promote financial inclusion.

### Policy recommendations and suggested measures
- Strengthen technical capacity across financial supervisors to improve AML/CFT and prudential oversight.
- Enhance stress-testing frameworks and close data gaps (notably for climate risk assessment and nonbank oversight).
- Operationalize real estate price indices to improve risk monitoring.
- Continue legal reforms to improve resolution frameworks and financial safety nets.
- Reduce central bank advances ceiling to government to bolster monetary framework supporting the exchange rate peg.
- Maintain implementation momentum on the 2024 DARE Act and prepare comprehensively for the Caribbean FATF evaluation planned for late 2026.

*International Monetary Fund — The Bahamas: Selected Chapter content.*

### 44. It is proposed that the next Article IV consultation with The Bahamas take place on the

### It is proposed that the next Article IV consultation with The Bahamas take place on the standard 12-month cycle.

### Real sector and price developments
- Flight arrivals have recently hovered around pre-pandemic levels; Jul 1: Borders reopened (shown in figure series).
- GDP growth supported by cruise-tourism buoyance and related investments, with GDP growth above potential in 2024-25.
- Completed private and commercial construction projects were at relatively high levels in 2024.
- Hotel occupancy rates increased slightly at seasonal peaks (demand and supply series shown).
- Amid subdued international oil prices, inflation is low.
- Unemployment developments:
  - Unemployment rate declined in 2024 and moderately rose in the first half of 2025.
  - Unemployment rate (percent), Q2 2025: 9.3 (Table 1).

### Fiscal developments and public debt
- Fiscal performance continued to improve in FY2024/25; gross financing needs remain high (figures).
- Strong revenue growth supported fiscal consolidation due to higher tourism-related revenues, cyclical rebound, and improved tax collection.
- Expenditure increased moderately but remains contained, partly reflecting under-execution of capital spending.
- Central government fiscal aggregates (FY2024/25 and projections):
  - Revenue (millions of Bahamian dollars), FY2024/25: 3,397 (Table 2a).
  - Expenditure (millions of Bahamian dollars), FY2024/25: 3,475 (Table 2a).
  - Overall Balance (percent of GDP), FY2024/25: -0.5 (Table 2b).
  - Primary Balance (percent of GDP), FY2024/25: 2.7 (Table 2b).
  - Central Government Debt (percent of GDP):
    - FY2024/25: 73.8 (Table 1 / Table 2b).
    - Projection path: 74.1 (2025/26), 72.7 (2026/27), 71.4 (2027/28), 69.9 (2028/29), 67.9 (2029/30), 65.8 (2030) (Table 1).
- Detailed central government operations (millions of B$; FY2024/25):
  - Taxes, FY2024/25: 3,026 (Table 2a).
  - VAT (FY2024/25): 1,438 (Table 2a).
  - Interest Payments, FY2024/25: 672 (Table 2a).
  - Net acquisition of nonfinancial assets, FY2024/25: 243 (Table 2a).
  - Overall Balance (millions of B$), FY2024/25: -78 (Table 2a).
  - Central government debt (millions of B$), FY2024/25: 11,938 (Table 2a).

### External sector developments
- By mid-2025, the current account level stayed broadly in line with previous years, mostly supported by travel receipts (figures).
- Lower commodity prices led to reduced oil imports, but the trade deficit in goods remains elevated.
- Net capital inflows have remained broadly stable and financed the trade deficit, supporting FX reserves’ accumulation.
- Key external numbers (US$ millions; selected from Table 3 and Table 1):
  - Current account balance (US$ millions): 2024: -1,206; 2025 (Est.): -1,285; 2026: -1,268; 2027: -1,268; 2028: -1,219; 2029: -1,208; 2030: -1,162 (Table 3).
  - Travel (credit, US$ millions): 2024: 5,413; 2025 (Est.): 5,526; 2026: 5,913; 2027: 6,331; 2028: 6,780; 2029: 7,233; 2030: 7,617 (Table 3).
  - Trade deficit (goods, US$ millions): 2024 imports 4,607 and exports 871; trade balance -3,737 (Table 3).
  - Gross international reserves (end period; millions of U.S. dollars):
    - 2024: 2,517; 2025 (Est.): 2,633; projections: 2026: 2,810; 2027: 2,941; 2028: 3,078; 2029: 3,202; 2030: 3,339 (Table 1 / Table 3).
  - Reserves in months of next year's G&S imports: 2024: 4.3; 2025 (Est.): 4.4; projected steady at 4.4 then 4.3 (Table 1).

### Financial sector developments and banking system
- Private sector credit growth rose since mid-2024, mainly boosted by business loans (figure series).
- Banking system liquidity remains substantial; banking sector liquid assets (B$ millions) series show minimum required liquid assets and components.
- Nonperforming loans (NPLs) trends:
  - NPLs have moderated pace of reduction but remain somewhat higher compared to regional peers.
  - Nonperforming loans to total gross loans (percent): 2024: 5.5 (Table 5).
  - Total provisions to NPLs (percent): 2024: 95.0 (Table 5).
- Banking profitability and capital:
  - Banks’ profitability remains at healthy levels: Return on assets (ROA): 2024: 4.2 (Table 5).
  - Regulatory capital to risk-weighted assets (percent): 2024: 34.7 (Table 5).
  - Banks' balance sheets (B$ billions; Table 4, end-2025 estimates and projections):
    - Reserve money, 2025: 2,807.
    - Liabilities to the private sector (broad money), 2025: 9,846.
    - Credit to private sector, 2025: 6,661.
- Financial soundness indicators (selected historical series, Table 5):
  - Nonperforming loans to total gross loans: 2015: 14.2; 2016: 11.4; 2017: 9.2; 2018: 9.1; 2019: 8.0; 2020: 8.5; 2021: 9.6; 2022: 7.7; 2023: 6.6; 2024: 5.5.
  - Liquid asset to total assets (percent): 2024: 37.6.
  - Return on equity (percent): 2024: 23.2.

### Key social and economic indicators and projections (selected)
- GDP (US$ millions), 2024: 15,833 (Table 1).
- GDP per capita (US$), 2024: 38,792 (Table 1).
- Population (thousands), 2024: 408 (Table 1).
- Poverty rate (percent), 2017: 14.8 (Table 1).
- Infant mortality rate (per 1,000 live births), 2022: 12.9 (Table 1).
- Life expectancy at birth (years), 2023: 74.6 (Table 1).
- Human development index (rank), 2023: 66 (Table 1).
- Real GDP growth (annual percentage change):
  - 2024: 3.4; 2025 (Est.): 2.8; projections: 2026: 2.2; 2027: 1.9; 2028: 1.8; 2029: 1.6; 2030: 1.5 (Table 1).
- Consumer Price Index (Annual average):
  - 2024: 0.4; 2025 (Est.): 0.6; projections: 2026: 1.2; 2027: 1.8; 2028: 1.8; 2029: 2.0; 2030: 2.0 (Table 1).
- Gross National Saving rate (percent of GDP): 2024: 18.8; 2025 (Est.): 18.7; projections to 2030: 19.4, 19.7, 20.3, 20.9, 21.7 (Table 1).
- Investment rate (percent of GDP, constant price): 2024: 26.5; 2025 (Est.): 26.5; projections to 2030: 26.9, 27.0, 27.2, 27.4, 27.7 (Table 1).
- Central government revenue and expenditure (percent of GDP, Table 1):
  - Revenue, 2024: 19.8; 2025 (Est.): 21.1; projections: 2026: 22.0; 2027: 22.2; 2028–2030: 22.2 (Table 1).
  - Expenditure, 2024: 21.0; 2025 (Est.): 21.6; projections: 2026: 22.5; 2027: 22.7; 2028: 22.6; 2029: 22.1; 2030: 22.0 (Table 1).

*Source: IMF staff compilation from the provided chapter figures, tables, and projections in the PDF content unit.*

### Annex I. Past Policy Advice33

### Annex I. Past Policy Advice33

### Fiscal Policy
- Recommendation: Ensure an independent selection process for members of the fiscal council to bolster the council’s independence.
  - Current Status: The Fiscal Responsibility Council, established as an independent body corporate under the 2023 Public Finance Management Act, became operational with five independent members appointed by the Minister of Finance in October 2024.
- Recommendation: Reform the national and civil service pension systems.
  - Current Status: The public consultation process for the civil service pension reform has concluded, and the Bill could be tabled in Parliament during the FY 2025/26 budget exercise.
- Recommendation: Introduce taxes on personal and corporate income.
  - Current Status: The authorities have passed legislation to implement OECD’s global minimum tax rules that introduces a 15 percent minimum effective tax rate for large multinational enterprise groups operating in The Bahamas. Revenue collection starts in FY 2025/26.
- Recommendation: Prioritize spending on education, health, social transfers, and climate resilient infrastructure.
  - Current Status: In the latest Fiscal Strategy Report, the authorities announced plans to make strategic investments in critical infrastructure. Priority projects focus on sectors such as healthcare, education, security, transportation, and utilities, with funding sourced through a combination of budgetary allocations, public-private partnerships (PPPs), and semi-concessional financing mechanisms.

### Structural and Climate Policy
- Recommendation: Increase access to liquidity in the event of a natural disaster and address market failures in the insurance sector.
  - Current Status: The authorities and the private sector are designing a partially subsidized natural disaster micro-insurance parametric product to address insurance affordability for the most vulnerable and to minimize post-disaster losses.
- Recommendation: Increase recourse to lower cost climate finance.
  - Current Status: The authorities have joined the Development Bank of Latin America and the Caribbean (CAF) and have leveraged policy-based guarantees from the IDB to reduce the cost of external financing.
- Recommendation: Accelerate the transition to renewable energy.
  - Current Status: The 2024 Electricity Act will help to facilitate investments in electricity transmission and distribution and to accelerate the transition toward 30 percent renewable energy by 2030.
- Recommendation: Complete the ongoing digitalization of public services, close data gaps, publish statistics in line with international standards, and leverage the census to design targeted policies.
  - Current Status: The Registrar General’s Department launched the new Corporate Administrative Registry Services portal in June 2024. The final results for the 2022 census were published in 2024.

### Financial Policy
- Recommendation: Allow short term interest rates to rise toward those in the U.S. to help preserve international reserves.
  - Current Status: The central bank has kept its rate unchanged, but international reserves remain adequate, supported by the recovery in tourism, public sector borrowing, and capital flow management measures. U.S. interest rates have since started to decline.
- Recommendation: Lower the ceiling on central bank financing of the government and introduce a well-designed “escape clause”.
  - Current Status: The legal limit on central bank financing of the government was reduced by the amendments to the Central Bank Act in 2023. A well-designed “escape clause” has not been introduced yet.
- Recommendation: Strengthen the regulatory framework for digital assets.
  - Current Status: The new DARE Act was enacted in 2024. It expands the range of activities considered and the scope of regulation on digital asset business activities, seeks to improve financial and reporting requirements for digital asset businesses, and aims to strengthen the framework for consumer and investor protection and risk management.
- Recommendation: Increase the coverage of deposit insurance for domestic banks and enhance the Deposit Insurance Corporation’s governance and operational structure.
  - Current Status: The Deposit Insurance Corporation approved an increase in the premiums levied on banks effective January 2024. The Government and the Central Bank are working to align the liquidation framework for credit unions with that of member banks of the DIC.
- Recommendation: Collect data for a real estate price index.
  - Current Status: A real estate price index has not yet been introduced.
- Recommendation: Collect loan-level data from both bank and nonbank lenders.
  - Current Status: Bank and nonbank loan-level data has not yet been made available.

*Source: Annex I. Past Policy Advice33 (extracted content).*

### Annex IV. Figure 1. The Bahamas: Debt Coverage and Disclosure

### Annex IV. Figure 1. The Bahamas: Debt Coverage and Disclosure

### Private sector credit: evolution, drivers, and metrics
- After strong growth before 2008, private credit from banks peaked as a share of GDP in 2009 and in nominal terms in 2011; credit growth declined sharply thereafter.
- By end-2024, private sector credit was at 39 percent of GDP, 5 percentage points below 2019 levels and 27 percentage points below the 2009 peak.
- The post-GFC credit slowdown was broad-based across residential mortgages, consumer, and business lending and contributed to a substantial rise in domestic banks’ excess liquidity.
- Credit has rebounded since 2022, supported by:
  - a remarkable rebound in real GDP following Hurricane Dorian in 2019 and the Covid-19 pandemic;
  - strong lending to firms in transportation, distribution, professional services, and tourism underpinning rapid growth in business loans;
  - more modest growth in personal lending.
- Loan approval rates—particularly in mortgages—have recovered to pre-pandemic levels, while the number of applications for mortgages, consumer loans and commercial credit, though higher than 2020 troughs, remained below pre-pandemic levels by 2024.
- Nonperforming loans (NPLs) and provisioning:
  - The NPL ratio has continued to decline to its lowest levels since pre-GFC.
  - Provisions-to-NPLs have declined from their 2020 peak, in part due to a reversal in buffers built up during the pandemic.
- Lending rates:
  - Lending rates, particularly on mortgages, have tended to fall in recent years.

### Policy changes and borrower-based measures affecting credit
- Central Bank borrower-based and related policy changes:
  - In 2022, the central bank increased the maximum debt-to-income ratio for personal loans to 50 percent from 40–45 percent and permitted banks to lend up to the value of collateral, except for mortgages.
  - Since 2023, borrowers are no longer required to obtain mortgage indemnity insurance to qualify for a lower down payment on mortgages.
- These policy adjustments likely contributed to the observed credit recovery.

### Implementation status of 2019 FSAP recommendations (assessment as of October 2025)
- Overall progress highlights:
  - The Central Bank published the Guidelines for the Management of Credit Risk in 2022 and incorporated minimum ICAAP expectations into The Bahamas Capital Regulation 2022; further work on ICAAP Guidelines is ongoing.
  - Governance at the Bank of Bahamas has improved and the previous moratorium on commercial lending has been lifted.
  - Corporate Governance Guidelines are under review as part of the Central Bank’s Policy Work Agenda.
  - The Central Bank is increasing its examination staffing by 2 full-time equivalents (FTEs) and 2 contractual specialists.
- Crisis management and safety nets:
  - Parliament enacted the Banks and Trust Companies Regulations Act, 2020; the Central Bank Act, 2020; and the Protection of Depositors (Amendment) Act, 2020, all of which came into force on September 1, 2020.
  - Guidance for public AMCs is still to be developed.
  - A draft legislative reform to strengthen the resolution framework for systemically important financial institutions was launched for public consultation in October 2025.
  - A Crisis Preparedness Working Group was formed; the MoU establishing a Financial Stability Council was concluded in December 2024 and the Council became operational in February 2025.
  - Deposit Insurance Corporation increased premiums effective January 2024; DIC funding would reach 4 percent of insured deposits by 2026. Legal reforms are planned to establish a back-up funding regime for the deposit insurance scheme.
- Financial stability analysis and data initiatives:
  - The credit bureau began operations in 2021.
  - Financial institutions report liquidity risk management strategy and positions on an ongoing basis; the Basel III Liquidity Risk Regulations and Guidelines are in progress and would require reporting of the Liquidity Coverage Ratio and Net Stable Funding Ratio.
  - Central Bank staff has begun preliminary work on constructing a real estate price index; data sourcing is ongoing.
- Macroprudential and nonbank oversight:
  - The Bahamas Capital Regulations (2022) and associated Guidelines took effect on July 15, 2022, and include additional capital buffers (capital conservation buffer and systemic risk buffer).
  - The central bank collects data on the largest credit exposures but has not started collection of detailed loan-level data for all loans.
  - The Financial Stability Council is prioritizing a comprehensive approach to surveying the nonbanking sector; the 2025 Co‑operative Credit Unions (Amendment) Bill is under public consultation.
  - Three working groups were formed by the Group of Financial Services Regulators; the Financial Stability Council became operational in February 2025.
- AML/CFT, fintech, and correspondent banking:
  - Central bank–supervised financial institutions are routinely supervised for AML; the Bank has asked institutions for self-risk assessments and is investing in an AML Risk Assessment tool to be rolled out by Q2 2025.
  - The central bank published a Digital Assets Framework and Guidelines; the 2024 DARE Act strengthened the regulatory framework for digital assets.
  - The Register of Beneficial Ownership Act was passed in 2018; progress continues on ensuring accuracy of beneficial ownership information in the register.
- Payments, financial inclusion, and SME support:
  - The 2023 Central Bank Act allows supervised NBFIs to have direct access to the ACH; regulated credit unions, international banks, PSPs and MTBs can establish settlement accounts directly with the Central Bank.
  - The Bank has proposed allowing the Government and the National Insurance Board to join the ACH.
  - The Small Business Development Center (SBDC), established in 2018, provides SMEs access to financing and training, including collaboration with the IDB.

### Data adequacy, quality issues, and capacity development priorities
- Overall data adequacy assessment: B (The data provided to the Fund have some shortcomings but are broadly adequate for surveillance).
- Sector median ratings: B C A B A B B (National Accounts; Prices; Government Finance Statistics; External Sector Statistics; Monetary and Financial Statistics; Inter-sectoral Consistency; Median Rating).
- Detailed questionnaire assessments summary:
  - Coverage: B B B C B
  - Granularity: A A B A
  - Consistency: A B B
  - Frequency and Timeliness: B C C A A
- Rationale and main data gaps:
  - All critical macroeconomic data, including comprehensive central government finance statistics, are regularly published in Central Bank and Ministry of Finance bulletins, but there are delays in publication of some government finance statistics.
  - Data coverage for government operations and debt has some gaps relative to peers (e.g., lack of general government accounts).
  - The authorities have yet to compile data on the International Investment Position (IIP).
  - National Accounts and Balance of Payments historical data are revised often; national accounts, employment, and inflation data are published with lags due to capacity constraints.
  - Staff continue to support authorities with technical assistance on IIP and balance of payments, and additional capacity development for government finance statistics.
- Recent and planned data actions:
  - Changes since the last Article IV consultation: None.
  - In 2025, the Bahamas National Institute of Statistics (BNSI) made historical revisions to GDP and other national accounts data introducing methodological improvements.
  - Authorities are completing data collection to launch a new household survey, after which they plan to rebase the CPI.
  - Staff’s definition of central government debt used in consultations includes payment arrears and promissory notes for the resolution of the Bank of The Bahamas, neither of which is included in the authorities’ published central government debt statistics; this payment was completed in FY2024/25.
  - Other data gaps: need for more timely and frequent labor statistics (including informal labor coverage) and more timely updates to tourism sector statistics.
- Data Standards Initiatives:
  - The Bahamas participates in the Enhanced General Data Dissemination System (e-GDDS) and has published data on its National Summary Data Page since December 2018.
  - A Table of Common Indicators Required for Surveillance is presented as of December 17, 2025, with observed frequencies, timeliness, and reporting practices for exchange rates, reserves, monetary aggregates, fiscal and external statistics, and other indicators.

*Source: Excerpts from the IMF staff report annexes (Annex IV–VII) for The Bahamas.*

### Annex VIII. Integrating Surveillance and Capacity

### Annex VIII. Integrating Surveillance and Capacity

### Tax Policy and Administration
- Surveillance recommendation:
  - Review tax expenditures and consider a comprehensive tax reform.
- Capacity Development (CD) and recent actions/plans:
  - FAD provided technical assistance (TA) on tax policy, including on the implementation of a Corporate Income Tax.
  - CARTAC provided TA on tax administration.
  - LEG provided TA on tax appeals.
  - Additional FAD and CARTAC support is expected in the near term.

### Expenditure Policy
- Surveillance recommendations:
  - Contain rising outlays to SOEs and pensions.
  - Enhance fiscal transparency by the timely publication of audited financial statements for public sector entities, including beneficial ownership information of companies awarded public procurement contracts.
- CD and recent actions/plans:
  - The Inter-American Development Bank released a public expenditure review in 2022.
  - CARTAC has delivered TA to strengthen fiscal risk management.

### Public Financial Management
- Surveillance recommendation:
  - Implement key elements of the PFM and Public Procurement Act.
- CD and recent actions/plans:
  - CARTAC has provided several TA missions on public financial management.
  - ICD is providing TA to operationalize the DIGNAD model for the Bahamian economy, including to quantify macro-fiscal impacts of natural disasters.

### Financial Sector and Domestic Debt Management
- Surveillance recommendations:
  - Update the central bank’s supervisory framework for bank intervention to ensure that early warning indicators are used more effectively and include climate risks into its stress testing frameworks.
  - Make amendments to the 2020 Central Bank Act to help safeguard the central bank’s institutional and financial autonomy.
  - Develop a local real estate price index and expand digitalization of financial services.
  - Continue strengthening the regulators’ internal capacity.
  - Enhance interagency coordination on systemic matters.
  - Improve domestic debt management operations.
- CD and recent actions/plans:
  - CARTAC has delivered TA on financial stability framework and macro-prudential and systemic risk indicators for financial stability assessment.
  - MCM and CARTAC have delivered TA on developing the local currency debt market, and additional IMF CD support in this area is expected in the near term.
  - ICD has delivered TA to strengthen macro-financial modelling and forecasting capacities.
  - CARTAC plans to provide TA on stress testing, laying the groundwork for future climate stress testing.

### AML/CFT
- Surveillance recommendation:
  - Establish and implement a robust supervisory framework to regulate registration, ensure prudential supervision, and AML/CFT compliance of digital assets.
- CD and recent actions/plans:
  - CARTAC has delivered TA on corresponding bank relationship monitoring toolkit.

### Statistics
- Surveillance recommendations:
  - Close data gaps and publish statistics according to international standards.
  - Conduct a household survey.
- CD and recent actions/plans:
  - ICD has delivered TA focused on improving macro modelling and forecasting capacities.
  - CARTAC has provided TA on national accounts statistics and price statistics; CARTAC plans to provide TA on GDP forecasting.
  - For external sector statistics, CARTAC engaged with the authorities in several TA missions to expand Balance of Payments data collection, reduce the size of errors and omissions, and to produce international investment position (IIP) statistics.
  - STA has provided several TA missions to the BNSI on external sector statistics, and to the CBOB to implement the standardized report forms (SRFs).
  - Staff continue to support the authorities’ efforts towards addressing data gaps, including continuing TA to compile and publish IIP statistics.
  - With Statistics Canada’s support, a National Accounts Advisory Committee has been established and MOUs are being implemented to improve administrative data classification, quality assurance and sharing.

### Fund Relations (as of December 31, 2025)
- Membership Status:
  - Joined August 21, 1973; Article VIII
- General Resources Account:
  - Quota: 182.40 SDR Millions (100.00 percent of Quota)
  - Fund Holdings of Currency: 163.12 SDR Millions (89.43 percent of Quota)
  - Reserve Position in the Fund: 19.29 SDR Millions (10.57 percent of Quota)
- SDR Department:
  - Net Cumulative Allocation: 299.24 SDR Millions (100.00 percent of Quota)
  - Holdings: 120.35 SDR Millions
  - 40.22 SDR Millions
- Outstanding Purchases and Loans: None
- Financial Arrangements: None. (The final repayment on the 2020 RFI was made on June 3, 2025.)
- Overdue Obligations and Projected Payments to Fund (SDR Million; based on existing use of resources and present holdings of SDRs):
  - Forthcoming 2026 2027 2028 2029 2030
  - Principal . . . . . . . . . . . . . . .
  - Charges/Interest: 4.79 4.77 4.77 4.76 4.77
  - Total: 4.79 4.77 4.77 4.76 4.77
- Exchange Rate Arrangements:
  - The de jure and de facto exchange rate arrangements in The Bahamas are classified as a conventional peg, vis-à-vis the US dollar.
  - The Bahamian dollar has been pegged to the U.S. dollar at B$1 per US$1.
  - The Bahamas has accepted the obligations under Article VIII, Sections 2, 3, and 4 of the IMF’s Articles of Agreement.
  - In 2024, the authorities introduced changes to exchange control arrangements, and IMF staff is currently assessing these changes in accordance with the Fund’s Institutional View on Liberalization and Management of Capital Flow Measures and Article VIII of the Fund’s Articles of Agreement.
- Last Article IV Consultation:
  - The Bahamas is on a 12-month cycle. The last Article IV consultation was concluded by the Executive Board on January 13, 2025 (IMF Country Report No. 2025/8).
- Resident Representative: None

### Capacity Development (selection of dates, purposes, and providers)
- LEG July 2012: Payment System Laws
- STA Jan 2013: Government Finance Statistics
- MCM February 2013: Financial Stability Reporting
- FAD April 2013: Tax Reforms for Increased Buoyancy
- CARTAC April 2013: Draft VAT Bill
- MCM May 2013: Basel II Implementation
- CARTAC May/September 2013: Central Revenue Agency
- CARTAC July 2013: Support for Customs and Excise Department’s Preparation of VAT
- FAD January/February 2014: Revenue Administration
- FAD March 2014: Tax Administration Readiness to Successfully Launch and Administer VAT
- FAD March 2014: Goods and Services Tax
- FAD March 2014: VAT Revenue Projection
- FAD April 2014: Revenue Impact of Implementing VAT
- MCM March 2014: Financial Crisis Management Planning
- MCM April 2014: Debt Management
- CARTAC June 2014: Price Statistics
- CARTAC August 2014: Balance of Payment and International Investment Position
- FAD September/October 2014: Revenue Administration
- FAD October 2014: Preparation to Launch a Value Added Tax
- CARTAC November 2014: Quarterly National Accounts
- CARTAC December 2014: Price Statistics
- LEG March 2015: Strengthening the Legal Framework for Bank Resolution and Crisis Management
- CARTAC August/September 2015: Quarterly National Accounts
- FAD February/March 2016: Assessment of VAT Launch and Administration
- CARTAC August 2016: National Accounts Statistics
- CARTAC August 2016: Financial Health and Stability Indicators for the Pension Sector in the Bahamas
- CARTAC May/June 2017: External Sector Statistics
- CARTAC June 2017: Macro-Prudential and Systemic Risk Indicators for Financial Stability Assessment
- CARTAC August 2017: National Accounts Statistics
- CARTAC November/December 2017: Price Statistics
- CARTAC April 2018: Public Financial Management
- STA April 2018: Monetary and Financial Statistics
- CARTAC May 2018: Financial Stability Framework
- CARTAC June 2018: Corresponding Bank Relationship Monitoring Toolkit
- CARTAC August 2018: National Accounts Statistics
- CARTAC September 2018: Public Financial Management
- CARTAC October 2018: e-GDDS
- CARTAC November 2018: Tax Administration
- CARTAC July 2019: Tax Appeals
- CARTAC September 2019: National Account Statistics
- CARTAC October 2019: Public Financial Management
- CARTAC February 2020: Public Financial Management
- CARTAC October 2020: External Sector Statistics
- CARTAC November 2020: Financial Programming and Policies
- CARTAC January 2021: Public Financial Management
- CARTAC August 2021: Tax Policy
- CARTAC September 2021: Financial Programming and Policies
- CARTAC September 2021: External Sector Statistics
- CARTAC October 2021: Public Financial Management
- CARTAC November 2021: Crisis Management
- CARTAC March 2022: Financial Programming and Policies
- CARTAC April 2022: Financial Programming and Policies
- CARTAC September 2022: External Sector Statistics
- CARTAC September 2022: National Account Statistics
- CARTAC December 2022: Financial Sector Infrastructure
- CARTAC March 2023: Bank Regulation
- CARTAC April 2023: External Sector Statistics
- CARTAC September 2023: CPI Statistics
- FAD February 2024: Debt management (local-currency bond market)
- CARTAC October 2023: Macroeconomic Program
- STA February 2024: External Sector Statistics
- FAD February 2024: Tax Policy
- FAD April 2024: Public Financial Management
- MCM September 2024–August 2025: Central Bank Governance and Operations
- CARTAC March 2025: External Sector Statistics
- ICD June 2025: Macroeconomic Frameworks
- CARTAC September 2025: Financial Sector Regulation and Supervision
- CARTAC October 2025: Public Financial Management
- CARTAC/LEG November 2025: Debt management (legal framework)
- ICD November 2025: Debt-Investment-Growth and Natural Disasters (DIGNAD model)
- CARTAC/MCM December 2025: Debt management (repo market)

*Annex VIII. Integrating Surveillance and Capacity — IMF staff report content.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2026/english/1bhsea2026001-source-pdf.pdf_