WASHINGTON, USA – The executive board of the International Monetary Fund (IMF) approved a disbursement in the amount of SDR 182.4 million (about US$250 million, 100 percent of quota) for The Bahamas under the Rapid Financing Instrument (RFI). These resources will help meet the urgent balance of payments needs stemming from the COVID-19 pandemic, boost resources for essential COVID-19-related outlays and catalyze additional support from development partners.
The Bahamas faces an unprecedented crisis as it battles the fallout from two consecutive large shocks. It was just recovering from the widespread destruction caused by hurricane Dorian in the fall of 2019, when the COVID-19 pandemic led to a sudden stop in tourism, causing a deep recession and creating large external and fiscal financing needs.
To contain the outbreak and mitigate the impact on the economy, the Government of The Bahamas declared a state of emergency in March, closed air and sea borders, and established an Economic Recovery Committee to guide the country’s COVID-19 response and recovery efforts. The authorities have introduced targeted fiscal measures to support the healthcare system, employment and the most vulnerable segments of the population.
Following the Executive Board’s discussion of The Bahamas, Tao Zhang, deputy managing director and acting chair, issued the following statement:
“The Bahamas was just recovering from the widespread destruction caused by Hurricane Dorian in the fall of 2019, when the pandemic led to a sudden stop in tourism, generating sizable fiscal and external financing needs. The economic outlook remains subject to an unusually high degree of uncertainty.
“The authorities’ policy response to the COVID-19 crisis is appropriate, including the timely adoption of targeted fiscal measures to boost health spending, support jobs and vulnerable segments of the population. Once the present crisis subsides, significant and determined fiscal consolidation will be needed to achieve the targets specified under the Fiscal Responsibility Act.
“The Central Bank of The Bahamas’ focus on maintaining an adequate level of international reserves is welcome. While efforts to maintain the flow of credit in the economy are warranted, the temporary relaxation of prudential regulations should continue to be accompanied by close monitoring of NPL classification and prudent risk management practices.
“The disbursement under the RFI will help boost resources for essential COVID-19related outlays, strengthen reserves and catalyze additional support from other international financial institutions, development partners, and the private sector.
“Looking beyond the crisis, it would be important for the authorities to resume their ambitious reform agenda including enhancing public financial management and SOE governance, advancing revenue administration reforms and continuing to improve the effectiveness of the AML/CFT framework. Strengthening resilience to natural disasters also remains a priority.”