NASSAU, BAHAMAS — The Ministry of Finance said yesterday that the recently published Concluding Statement from the executive board of the International Monetary Fund (IMF) was proof that the government’s fiscal policy responses and economic management are producing results in keeping with global best practices.
Minister of State for Finance Kwasi Thompson said: “We were happy to see that the board of the IMF has supported its staff’s view that the government has mounted a successful response to the pandemic.
“Many have noted the effectiveness of our policies to increase social support through unemployment and food assistance, and our targeted reductions in recurrent and capital expenditures.
“These have all helped to take care of Bahamians as we strive towards economic recovery and the IMF’s initial remarks show that our plan is working.”
In response to the COVID-19 pandemic, the government shifted its fiscal policies towards providing relief to households, individuals who became unemployed due to the pandemic, the small business sector and the health sector.
This focus recognized the government’s commitment to placing the welfare of Bahamians and the small business community at the forefront of its policy response.
The executive board of the IMF has noted that the government’s near-term priority is to “save lives and livelihoods”, adding that it is “appropriate” to postpone the achievement of the public debt target of 50 percent of GDP by another two years.
According to the IMF, public debt is expected to jump to almost 90 percent of GDP by 2021 and to remain more than 22 percentage points above its pre-pandemic level over the medium-term.
The executive board concluded the Article IV consultation with The Bahamas on January 22.
The IMF has projected that real GDP will contract by 16.2 percent in 2020, followed by a modest rebound of two percent in 2021, and converge back to its pre-pandemic level only by 2024.
Thompson said: “We look forward to the release of the full Article IV report, which provides the full assessment of the IMF staff regarding their views on the state and prospects for the Bahamian economy.
“We can say already that many of the areas that they have signaled for reform are and have been in line with this administration’s policy priorities.”