## The Bahamas: Selected Issues

_IMF Staff Country Reports, May 14, 2018_

## Source details

**Canonical URL:** [The Bahamas: Selected Issues](https://www.imf.org/en/publications/cr/issues/2018/05/14/the-bahamas-selected-issues-45875)

## Other formats

- [Markdown version](/en/publications/cr/issues/2018/05/14/the-bahamas-selected-issues-45875/index.md)
- [Structured JSON version](/en/publications/cr/issues/2018/05/14/the-bahamas-selected-issues-45875/index.json)
- [Bundle manifest](/en/publications/cr/issues/2018/05/14/the-bahamas-selected-issues-45875/bundle-manifest.json)

## Bibliographic details
- Published: May 14, 2018
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484355176.002

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### Key findings
- The paper makes the case for a rules-based fiscal framework for The Bahamas.
- IMF staff recommends adopting a headline deficit ceiling and a cap on current expenditure growth.
- The proposed rules are calibrated to guide debt toward a suitable medium-term anchor while allowing room for stabilization.
- A headline deficit target is described as simpler to communicate and monitor than a structural balance rule.
- The framework would allow expanding capital spending, up to the limit provided by the deficit ceiling, in the event of improvements in revenue performance.
- In line with best practices, the framework should be anchored around a pre-defined medium-term debt target that will guide the calibration of proposed operational rules.

### Policy recommendations
- Adopt a headline deficit ceiling.
- Implement a cap on current expenditure growth.
- Anchor the fiscal rules around a pre-defined medium-term debt target.
- Permit discretionary expansion of capital spending only within the limit set by the deficit ceiling, contingent on improved revenue performance.

### Design and calibration considerations
- Use a simple headline deficit target rather than a structural balance rule to enhance communication and monitoring.
- Calibrate the deficit ceiling and current expenditure growth cap so they jointly guide debt toward the chosen medium-term debt anchor while preserving stabilization space.
- Pre-define the medium-term debt target to serve as the guiding anchor for the calibration of operational rules.

### Rationale
- Simplicity: A headline deficit target is easier to communicate and monitor than a structural balance rule.
- Flexibility: The proposed design allows for capital spending increases when revenue performance improves, constrained by the deficit ceiling.
- Discipline: Anchoring the framework to a medium-term debt target aligns operational limits with longer-term debt sustainability objectives.

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## Content in this bundle

- **Country Report**
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_Source: https://www.imf.org/en/publications/cr/issues/2018/05/14/the-bahamas-selected-issues-45875_