Above: the Bahamas

By the Caribbean Journal staff

The economy of the Bahamas is recovering from the effects of the global financial crisis, but at a “painfully slow pace,” according to the International Monetary Fund, which recently concluded its Article IV consultation with the country.

The fund said economic activity in the Bahamas should recover “more strongly” from 2014 onward, however, as growth solidifies in the United States and with the opening of the Baha Mar resort project.

“Growth performance over the medium term will also depend on success in addressing a number of challenges going forward, including diversifying tourist source markets and the tourism experience and expanding incoming airlift capacity; advancing efforts to close infrastructure bottlenecks and workforce skills shortages; and strengthening non-tourism sectors,” the IMF’s executive directors said in a statement. “Steadfast and timely execution of needed reforms will be crucial.”

After estimated real GDP growth of 1.9 percent in 2013, the country is projected to see GDP growth of 2.3 percent in 2014 and 2.8 percent in 2015, according to the IMF.

Unemployment in the Bahamas rose to 16.2 percent in mid-2013, the fund said, and while tourist arrivals and expenditures have been “subdued,” “brisk investment and construction for the Baha Mar resort project have helped support economic activity.”

“Rigorous implementation of the authorities’ fiscal consolidation plan is essential to recapturing medium-term budget and debt sustainability,” the Fund said. “The VAT is the cornerstone of the fiscal adjustment program; the authorities should ensure its timely and successful launch. On the spending side, the efforts to reinforce expenditure controls and monitoring should be accelerated, especially as regards goods and services spending and transfers; and reforms to improve the weak financial position of key public corporations and rein in transfers and subsidies should be given high priority.”