IMF Executive Board Concludes 2020 Article IV Consultation with The Bahamas

IMF News, January 26, 2021

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Canonical URL: IMF Executive Board Concludes 2020 Article IV Consultation with The Bahamas

The Executive Board concluded the Article IV consultation with The Bahamas on January 22, 2021.
The Bahamas faced compounded shocks: severe damage from Hurricane Dorian in fall 2019 followed by the COVID-19 pandemic, which caused a sudden stop in tourism—the main source of income and employment.
Authorities implemented a rapid emergency response, strict containment measures, and measures to support vulnerable households; reopening was challenging amid limited testing and health resources.
Risks around the baseline are high, reflecting the uncertain evolution of the COVID-19 pandemic and The Bahamas’ vulnerability to natural disasters.

Real GDP: 2019: 1.2; 2020: -16.2; 2021: 2.0; 2022: 8.5; 2023: 4.0; 2024: 3.5; 2025: 1.8; 2026: 1.5
Nominal GDP: 2019: 4.3; 2020: -17.3; 2021: 4.2; 2022: 10.6; 2023: 6.0; 2024: 5.5; 2025: 3.8; 2026: 3.4
GDP deflator: 2019: 3.0; 2020: -1.3; 2021: 2.2; 2022: 1.9
Consumer price index (annual average): 2019: 2.5; 2020: -0.2; 2021: 2.1
Consumer price index (end of period): 2019: 1.4; 2020: 0.8
Unemployment rate (percent): 2019: 10.1; 2020: 25.6; 2021: 24.0; 2022: 17.2; 2023: 13.5; 2024: 12.5; 2025: 12.0
Gross national saving rate (percent of GDP): 2019: 27.5; 2020: 10.5; 2021: 6.5; 2022: 7.6; 2023: 9.4; 2024: 12.6; 2025: 12.7
Investment rate (percent of GDP): 2019: 23.6; 2020: 27.9; 2021: 28.9; 2022: 24.3; 2023: 22.3; 2024: 20.9; 2025: 20.4; 2026: 20.2

Exports of goods and services (annual % changes): 2019: 8.1; 2020: -65.2; 2021: -14.4; 2022: 123.9; 2023: 30.2; 2024: 23.9; 2025: 8.9
Travel receipts (gross): 2019: 10.7; 2020: -75.1; 2021: -18.7; 2022: 206.7; 2023: 36.2; 2024: 27.6; 2025: 9.8; 2026: 5.4
Imports of goods and services (annual % changes): 2019: -4.0; 2020: -21.5; 2021: -5.1; 2022: 38.8; 2023: 12.3; 2024: 9.7; 2025: 5.9; 2026: 3.9
Current account balance (percent of GDP): 2019: -17.4; 2020: -22.4; 2021: -16.8; 2022: -12.9; 2023: -7.8; 2024: -7.5
Gross international reserves (End of period; millions of U.S. dollars): 2019: 1,758; 2020: 2,339; 2021: 1,683; 2022: 1,653; 2023: 1,731; 2024: 1,832; 2025: 1,967; 2026: 2,123
Reserves in months of next year's G&S imports: 2019: 7.7; 2020: 3.3

Revenue and grants: 2019: 18.1; 2020: 16.9; 2021: 14.2; 2022: 16.2; 2023: 17.9; 2024: 19.0; 2025: 19.4; 2026: 19.6
Expenditure: 2019: 19.8; 2020: 23.4; 2021: 26.7; 2022: 25.0; 2023: 21.9; 2024: 21.5; 2025: 21.1; 2026: 20.7
Expense: 2019: 18.3; 2020: 21.6; 2021: 24.8; 2022: 22.8; 2023: 20.3; 2024: 19.9; 2025: 19.5
Overall balance: 2019: -1.6; 2020: -6.6; 2021: -12.4; 2022: -8.8; 2023: -2.6; 2024: -1.8; 2025: -1.0
Primary balance: 2019: -3.8; 2020: -8.9; 2021: -5.2; 2022: -0.7; 2023: 1.6
Central government debt (percent of GDP): 2019: 58.8; 2020: 68.6; 2021: 88.6; 2022: 88.1; 2023: 86.2; 2024: 84.5; 2025: 82.8; 2026: 81.3
Central government external debt: 2019: 18.9; 2020: 35.1; 2021: 39.5; 2022: 37.7; 2023: 36.3; 2024: 35.4; 2025: 34.4
Change in NIR (increase -) 3/: 2019: -4.1; 2020: 5.6; 2021: 0.2; 2022: -0.6; 2023: -0.9

The banking sector remains well capitalized overall, but some banks and credit unions are vulnerable to pandemic-induced risks, including an erosion of asset quality once loan moratoria expire, with negative implications for profitability and capital adequacy.
Credit to the nonfinancial public sector (annual % changes): 2019: 8.2; 2020: 9.1; 2021: 14.1; 2022: 8.8; 2023: 6.3; 2024: 5.1; 2025: 3.1
Credit to the private sector (annual % change): 2019: 0.1
Executive Directors recommended:
- Central bank to request regular loan portfolio reviews and risk assessments from banks.
- Further development of macroprudential tools and strengthening interagency coordination.
- Establishment of an asset registry and real estate price index to reduce information asymmetries and support financial inclusion.
- Careful monitoring of risks to financial intermediation, integrity, and cybersecurity related to the central bank digital currency.

Directors commended timely measures to sustain public health, protect the vulnerable, and cushion the pandemic’s employment impact.
Near-term priority: save lives and livelihoods; postponing the achievement of the public debt target by another two years is appropriate.
Medium-term priority: put debt on a clear downward path and rebuild buffers, requiring significant fiscal effort.
Specific fiscal and structural recommendations:
- Tax policy and administration reforms.
- Expenditure prioritization to ensure a robust and equitable consolidation once the pandemic abates.
- Modernize the business climate, rationalize SOEs, and reduce labor market frictions.
- Gradually restore the disaster relief fund (depleted following Hurricane Dorian) while improving targeting of social programs.
Directors welcomed central bank’s focus on reserve adequacy and supported temporary COVID-19 related capital flow management measures, recommending they be phased out when the pandemic recedes.
Directors welcomed The Bahamas’ exit from the Financial Action Task Force list of jurisdictions under enhanced monitoring, while emphasizing the need for continuous and effective AML/CFT implementation.

Imf Communications Department, January 26, 2021