The Central bank of the Bahamas (CBB) Monday said the robust recovery of the Bahamian economy was sustained in 2022, underpinned by the further rebound in tourism and steady stimulus from foreign direct investments.
However, in its 2022 Annual report, the CBB said domestic price pressures increased, mirroring the pass-through effects from higher global oil prices and elevated costs on imported goods.
“In terms of the fiscal out turn, the deficit narrowed significantly in financial year2021/22, given a strong recovery in revenue, which outpaced the rise in total spending. Similarly, during the first half of the new finance year 2022/23, the deficit decreased, as the revenue rebound continued,” said CBB Governor John Rolle.
Rolle said monetary and credit trends were largely influenced by inflows from government’s external borrowings and net tourism receipts. He said with credit expansion trailing the corresponding gains in deposits, the inflows contributed to a buildup in liquidity and external reserves.
“Given the improved outlook for the reserves, the Central Bank maintained an accommodative monetary policy posture for domestic credit. However, domestic banks’ appetite to expand private sector credit remained subdued, given the overhang of lending risks which pre-dated the COVID-19 pandemic.”
Rolle said that in the meantime, banks’ credit quality indicators improved, in line with economy’s upturn.
He noted that on the financial sector supervision front, in August 2022, the Central Bank relaxed some prudential controls on credit policies.
“Within the confines of lending institutions’ credit risk management frameworks, the regulatory stipulated maximum total debt service ratio (TDSR) on personal lending was relaxed to 50 per cent, from within a range of 40 to 45 per cent.
“Also, the Central Bank sanctioned up to 100 per cent financing of borrower requests, for qualified personal loans other than residential mortgages, as opposed to the previously mandated minimum 15 per cent equity or down payment requirement.”
Rolle said last year, the Central Bank also lifted the moratorium on new license applications for money services business, owing to the Bank’s assessment that the sub-sector was in a healthier position to establish a stable footing going forward.
He said efforts also gained more traction around the implementation of international risk-based supervisory standards for financial institutions, and the development of crisis management frameworks for Bahamian banks and credit unions.
“The Central Bank’s input, coordinated with the efforts of other domestic regulators, continued to strengthen and uphold the Bahamian jurisdiction’s international standing in countering money laundering related financial crimes.
“Added to its supervisory engagement, the Central Bank also deployed new monitoring tools to analyse SWIFT wire transfers, to develop new insights on the characteristics of cross-border payments between The Bahamas and the rest of the world.”
The Central Bank Governor said that there was additional progress on financial markets infrastructure development. Among these was the October launch of The Bahamas Registered Stock (BRS) Portal—a web based solution—automating the subscription process for Government debt.
Rolle said the Bahamas government Securities depository project also progressed satisfactorily, to enable the commissioning of the platform at the beginning of 2023.
He said these initiatives were indicative of the broader efforts to improve the delivery channels for public-facing services, as more services in both the Exchange Control and Banking Supervision Departments moved closer to full automation.
The Central Bank said that it made important technical inroads on the digital currency project, now poised for an increased emphasis on adoption in 2023.
“Given the relaxation of COVID-19 protocols, some resumed in-person educational and marketing campaigns, toward increasing use and awareness of SandDollar.
“The greater efforts however, remained on developments within the technical platform, to complete the integration with the ACH; and upgrades to the digital wallet architecture to support increased involvement of Banks and credit unions in 2023, and faster growth in the merchant ecosystem for digital wallet payments”.
