IMF Executive Board Concludes 2025 Article IV Consultation with The Bahamas
IMF News, February 5, 2026
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- Published: February 5, 2026
Overview
- The Executive Board completed the 2025 Article IV consultation with The Bahamas and endorsed the staff appraisal without a meeting, on a lapse-of-time basis.
- The authorities consented to publication of the Staff Report prepared for this consultation.
- Date of press release: February 5, 2026. Press Release No. 26/031.
Recent Economic Performance
- Real GDP expanded by 3.4 percent in 2024.
- Growth remained resilient in the first half of 2025, supported by construction and cruise tourism.
- Unemployment rate: 9.3 percent in the second quarter of 2025.
- Inflation decelerated to 1.3 percent in July 2025, partly reflecting lower global energy prices.
- Fiscal outcomes in FY2024/25: primary balance remained in surplus and the fiscal deficit narrowed to 0.5 percent of GDP.
- Central government debt remains elevated, at around 74 percent of GDP.
Outlook and Risks
- Growth projections:
- Growth is expected to be around 2.8 percent in 2025.
- Growth is expected to gradually slow toward 1½ percent (the assessed potential growth rate) over the medium term.
- Inflation and external sector:
- Headline inflation is projected to settle at around 2 percent.
- The current account deficit is projected to narrow to about 6 percent of GDP over the medium term.
- Risks to the outlook:
- Downside: potential global slowdown affecting tourism; natural disasters.
- Upside: greater-than-expected effects of public and private infrastructure projects linked to tourism and the energy sector reform.
Executive Board Assessment — Key Messages
- Strengths and priorities:
- Robust post-pandemic tourism has driven growth and fiscal revenues.
- Actions taken to improve public finances and enhance disaster risk management.
- Ongoing electricity sector reform, increased tourism capacity, and investment in climate resilience are critical to reduce fiscal vulnerabilities and foster sustained growth.
- Growth path and risks:
- Growth in 2025 supported by construction and cruise tourism; expected to converge to 1½ percent over the medium term.
- Risks broadly balanced: downside (global slowdown, natural disasters); upside (infrastructure and electricity reform benefits).
- Fiscal policy and debt target:
- Achieving the authorities’ medium-term target for central government debt (50 percent of GDP) requires additional measures.
- Recommended measures include introducing corporate and personal income taxes, rationalizing tax expenditures, raising the standard VAT rate, and reducing transfers to SOEs.
- Prioritize revenue-enhancing and expenditure-optimizing measures to create space for priority investments, such as education and resilient infrastructure.
- Fiscal institutions and fiscal risks:
- Immediate priority: improve fiscal reporting and enhance institutional framework for PPPs.
- Accurately assess and mitigate fiscal risks arising from SOEs.
- Supplement planned civil service pension reform with more holistic changes to address actuarial imbalances.
- Advance adoption of an accrual-based accounting system for the budget to improve fiscal transparency.
- Continue efforts to reduce debt rollover risks.
- Financial sector:
- Systemic financial stability risks are moderate.
- As bank credit to the private sector increases, safeguard banks’ resilience and monitor banks’ exposure to the sovereign.
- Strengthen oversight of nonbanks and close data gaps; operationalize real estate price indices.
- 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; enhance risk-based AML/CFT supervision and promote financial inclusion.
- Structural and resilience policies:
- Raise productivity and implement fiscal consolidation to narrow external imbalances.
- Ongoing hotel and airport infrastructure projects can alleviate tourism capacity constraints.
- Reduce vulnerable employment and informality by cutting red tape, strengthening education, and expanding training and upskilling.
- Trade diversification and greater product market competition can strengthen resilience and reduce import costs.
- 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.
Fiscal and Macro-Financial Recommendations (Selected)
- Introduce corporate and personal income taxes.
- Rationalize tax expenditures.
- Raise the standard VAT rate.
- Reduce transfers to state-owned enterprises (SOEs).
- Improve fiscal reporting and PPP institutional framework.
- Assess and mitigate SOE-related fiscal risks.
- Supplement civil service pension reform with broader actuarial solutions.
- Adopt accrual-based budget accounting.
- Reduce debt rollover risks.
- Strengthen oversight of nonbanks and close financial data gaps.
- Implement planned legal reforms for resolution frameworks and safety nets.
- Reduce the ceiling on central bank advances to government; implement the 2024 DARE Act.
- Enhance risk-based AML/CFT supervision and promote financial inclusion.
- Invest in education, resilient infrastructure, social housing, and training/upskilling.
Key Indicators (Selected from Table 1)
- 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.
- 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: 2.0.
- CPI inflation (%, end of period): 2023: 0.0; 2024: 0.7.
- Fiscal overall balance (% of GDP) 1/: 2023: -3.7; 2024: -1.2; 2025: -0.5; 2026: -0.4; 2027: -0.3; 2028: 0.1; 2029: 0.2.
- Fiscal primary balance (% of GDP) 1/: 2023: 0.3; 2024: 2.7; 2025: 3.7; 2026: 3.6; 2027: 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.
- Note: 1/ Fiscal year (FY, July 1 - June 30).
Press Release No. 26/031, IMF, February 5, 2026.