{
  "title": "IMF Executive Board Concludes 2023 Article IV Consultation with The Bahamas",
  "publication": "IMF News, February 2, 2024",
  "sourceUrl": "https://www.imf.org/en/news/articles/2024/02/02/pr2436-bahamas-imf-exec-board-concludes-2023-art-iv-consult",
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  "summary": "On January 19, 2024, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with The Bahamas and endorsed the staff appraisal without a meeting on a lapse-of-time basis.",
  "publishDate": "2024-02-02",
  "sections": [
    {
      "heading": "Economic performance and near-term outlook",
      "content": "- Real GDP growth:\n  - 2021: 17.0 (annual % change)\n  - 2022: 14.4 (annual % change)\n  - 2023: 4.3 (annual % change, estimated)\n  - 2024–2028: 2.3; 1.8; 1.6; 1.5 (proj. for 2024–2027)\n- Unemployment rate:\n  - 2021: 17.6%\n  - 2022: 10.8%\n  - 2023: 8.8%\n  - 2024–2027: 8.9%; 9.0%; 9.1% (proj.)\n- Inflation (CPI):\n  - End of period: 2021: 4.1%; 2022: 5.5%; 2023: 3.6%; 2024–2027: 2.9%; 2.4%; 2.1%; 2.0%\n  - Period average: 2021: 5.6%; 2022: 3.4%; 2023: 3.1%; 2024–2026: 2.6%; 2.2%\n- External sector:\n  - Current account balance as % of GDP:\n    - 2021: -21.1%\n    - 2022: -8.2%\n    - 2023: -6.2% (projected narrowed)\n    - 2024–2027: -6.1%; -5.8%; -5.7%; -5.5% (proj.)\n- Assessment:\n  - Economy continues to rebound vigorously, driven by large tourism inflows.\n  - Tourist arrivals and real average spending surpassed pre-pandemic levels in 2023 and are expected to continue rising in the near term.\n  - Risks include an economic slowdown in tourism source markets and potential costly natural disasters."
    },
    {
      "heading": "Fiscal developments and recommendations",
      "content": "- Fiscal balances and debt:\n  - Fiscal overall balance (% of GDP, FY July 1 - June 30):\n    - 2021: -13.1%\n    - 2022: -3.9%\n    - 2023: -2.6%\n    - 2024–2028: -2.0%; -1.7%; -1.2%; -1.0% (proj.)\n  - Fiscal primary balance:\n    - 2021: -9.0\n    - 2022: -1.3\n    - 2023: 0.3\n    - 2024: 1.7\n    - 2025: 2.8\n  - Government debt (% of GDP) 1/:\n    - 2021: 100.0%\n    - 2022: 88.9%\n    - 2023: 84.2%\n    - 2024–2028: 83.2%; 81.9%; 80.8%; 79.5%; 78.1% (proj.; 1/ Fiscal year)\n- Key fiscal recommendations:\n  - Speed up reduction in debt-to-GDP.\n  - Use the implementation of the OECD global minimum corporate income tax as an opportunity to introduce a well-designed corporate income tax and a personal income tax on highest earners.\n  - Revise tax preferences and exemptions to create a more progressive and efficient tax system.\n  - Rationalize SOE spending and improve SOE financial management; publish audited financial statements of SOEs.\n  - Enhance debt management and fiscal transparency:\n    - Consider extending competitive auctions to domestic government securities across maturities.\n    - Increase predictability of sovereign issuance plans.\n    - Lower the limit on central bank advances to the government.\n    - Make deviations from PFM Act targets time-bound with clear guidance on return timelines.\n  - Publish beneficial ownership information for providers that obtain public contracts.\n  - Ensure an independent process to select members of the fiscal council."
    },
    {
      "heading": "Financial sector resilience and reforms",
      "content": "- Current conditions:\n  - Financial sector remains robust, with abundant liquidity and declining NPLs.\n  - Private credit growth is muted and underperforming relative to output growth.\n- Recommended actions:\n  - Continue implementation of the 2019 FSAP recommendations.\n  - Enhance supervision and regulation of crypto assets.\n  - Make the Resolution Unit within the central bank and the Financial Stability Council adequately staffed and operational.\n  - Increase deposit insurance coverage and improve the Deposit Insurance Corporation’s governance.\n  - Consider further amendments to the DARE Act to align with global standards, accompanied by additional resources for onsite inspections.\n  - Expand financial sector data collection to better identify systemic risk and design macroprudential policies."
    },
    {
      "heading": "Climate, infrastructure, and social policy priorities",
      "content": "- Climate and disaster resilience:\n  - Build effective measurement, reporting and verification frameworks for climate-related projects.\n  - Develop projects with co-benefits across other SDG.\n  - Partner with established institutions in climate finance to exploit climate financing opportunities.\n  - Consider reforms to the property insurance market:\n    - A public mandate for minimum property insurance combined with partial public funding of micro-insurance products, land-planning, and incentives for resilient infrastructure investments.\n- Energy and growth constraints:\n  - Accelerate transition to renewable energy to improve electricity affordability and reliability.\n  - Support authorities’ goal of 30 percent share of renewables by 2030 through hastening solar projects and improving the national electricity company’s governance.\n  - Consider a higher base rate for electricity to help cover renewable investments.\n  - Expand public-private partnerships and incentivize private investments in renewables through direct subsidies or tax credits.\n- Social outcomes and potential growth:\n  - Raising potential growth beyond 1.5 percent is conditional on addressing bottlenecks in the energy sector and labor markets.\n  - Reorient spending toward education, healthcare, targeted social transfers and infrastructure to improve social outcomes.\n  - Close gaps in digitalization of public services and data gathering to reduce frictions against private investment and improve targeting of social assistance.\n  - Address regressivity of public spending by improving targeting of social assistance."
    },
    {
      "heading": "Executive Board assessment — summary points",
      "content": "- Near-term growth prospects are favorable but require policy adjustments to strengthen potential growth and reduce downside risks.\n- The recovery of tourism has restored losses from hurricane Dorian and the Covid crisis; unemployment is at its lowest level since 2008.\n- The favorable environment provides space to pursue greater fiscal sustainability, social equity, and climate resilience.\n- Recommendations emphasize fiscal consolidation, improved tax design and administration, SOE reform, enhanced fiscal transparency, strengthened financial sector oversight, climate financing readiness, insurance market reform, renewable energy acceleration, and better-targeted social spending.\n\nSource: IMF press release, February 2, 2024.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- The Bahamas and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2024/02/02/pr2436-bahamas-imf-exec-board-concludes-2023-art-iv-consult"
    }
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    "Published: February 2, 2024",
    "Real GDP growth:",
    "Unemployment rate:",
    "Inflation (CPI):",
    "External sector:",
    "Assessment:",
    "Fiscal balances and debt:",
    "Key fiscal recommendations:",
    "Current conditions:",
    "Recommended actions:",
    "Climate and disaster resilience:",
    "Energy and growth constraints:",
    "Social outcomes and potential growth:",
    "Near-term growth prospects are favorable but require policy adjustments to strengthen potential growth and reduce downside risks.",
    "The recovery of tourism has restored losses from hurricane Dorian and the Covid crisis; unemployment is at its lowest level since 2008.",
    "The favorable environment provides space to pursue greater fiscal sustainability, social equity, and climate resilience.",
    "Recommendations emphasize fiscal consolidation, improved tax design and administration, SOE reform, enhanced fiscal transparency, strengthened financial sector oversight, climate financing readiness, insurance market reform, renewable energy acceleration, and better-targeted social spending.",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[The Bahamas and the IMF](http://www.imf.org/external/country/BHS/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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