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Financial Market Brief April 15 2016
The Bahamas has a number of social and economic challenges which were underscored in the recently released ‘State of the Nation’ 2016 report. High on the list of challenges is education. Access to free schooling is a fundamental human right that is afforded to every child residing in the Bahamas, no matter his residency status, ethnicity or station in life. A quality education is essential to the development of the nation’s human capital and innovative capacity. Focus must be placed on developing and successfully executing a world-class education agenda that will allow every child in the country to reach their full potential and positively contribute to the advancement of the nation. Notwithstanding this free access to education, schooling has not yielded the level of economic and social success anticipated. According to the ‘State of the Nation’ report, fifty per cent of the country’s high school graduates earn a high school diploma in a given year and the remaining fifty per cent were granted a mere “certificate of attendance” meaning that they attended school but did not earn the standard required for graduation. Weekly_Market_Recap_15-Apr-2016 Click here for full Weekly Market Recap
Financial Market Brief April 8 2016
The Bahamas Offshore Banking Sector has emerged over the years from a disorganized and unregulated sector, to a well-established leading financial center in the region and the world. The offshore sector has thrived, due to the absence of taxes on wealth, income and inherited assets, coupled with bank secrecy laws that protected wealthy investors and their assets. In June 2000, the offshore sector was dealt a severe blow. The Bahamas was included with 35 countries listed by the Organization for Economic Cooperation and Development (OECD) as a “harmful tax haven” and was threatened with being blacklisted if the Bahamas did not comply with a list of international financial standards by a set date. The OECD actually required the Offshore Financial Centers listed to sign a letter of commitment by February 28, 2002 or face economic sanctions. The Bahamas Government reacted and passed a set of financial laws in order to escape the possibility of damaging economic penalties. Weekly_Market_Recap_8-Apr-2016 Click here for full Weekly Market Recap
Financial Market Brief April 1 2016
Exchange controls, which are government implemented regulations on payments and financial transactions between the domestic and foreign markets, have been in place in the Bahamas since the colonial days, with some relaxation over the years. When the Bahamas became a member of the International Monetary Fund (IMF) Article VIII in 1992, it accepted the obligation of the article which states, “no member shall, without the approval of the Fund, impose restrictions on the making of payments and transfers for current international transactions”. So in essence, legitimate requests from Bahamian residents for foreign currency purchases to fund current account transactions are generally approved. Relaxation on capital account transactions which include loans, securities investments and direct foreign investments, however, have occurred at a slower pace. Weekly_Market_Recap_1-Apr-2016 Click here for full Weekly Market Recap
Financial Market Brief March 18 2016
Pension funds are among the fastest growing pool of assets in the country and its mobilization will have a profound and increasingly important impact on future economic activity, particularly with respect to Bahamian financial markets. Private pension funds have grown in size from $628.6M or 15.0% of GDP in 1998 to $1.1B in 2007 or 15.4% of GDP. The National Insurance Board assets under management have also grown from $746.2M or 17.8% of GDP in 1998 to $1.4B or 20.1% of GDP in 2007 (the latest information available on the size of pension plans in the Bahamas). Given the size and significance of this sector, it is imperative that a comprehensive reform strategy be created to ensure proper oversight and to modernize the country’s pension sector.. Weekly_Market_Recap_18-Mar-2016 Click here for full Weekly Market Recap
Financial Market Brief Mar 11 2016
On Monday, 7th March 2016, the Prime Minister of the Bahamas and Minister of Finance presented his 2015/16 mid-year budget statement. Though scant on statistics, the prime minister stated that the government’s medium-term fiscal consolidation plan, implemented three years ago, has to date been successful. According to the Minister of Finance in his 2013/14 budget communication, the fiscal objectives of this medium-term plan are as follows: (1) To eradicate both the deficit on the Recurrent Account and the GFS Deficit by 2015/16; (2) Eliminate the primary deficit by 2014/15, which the government feels will reverse the upward trend in the debt to GDP ratio; (3) Return government debt to a level in the area of 50% of GDP by 2016/17, as opposed to a level approaching 70%. Following the implementation of its medium-term fiscal consolidation plan, the government has made some progress on the revenue and deficit fronts. However, there still remains a long way to go to fix the country’s fragile public finances, which have deteriorated over the years due largely to the financial crisis that led to a global and local recession. Weekly_Market_Recap_11-Mar-2016 Click here for full Weekly Market Recap
Financial Market Brief March 4 2016
Earlier this year, February 9, 2016, Bahamas Power and Light (BPL),formerly Bahamas Electricity Company Limited (BEC), signed a fiveyear Management Services Agreement with PowerSecure to provide management services for BPL for the next five years. Under the terms of the agreement, PowerSecure has committed to minimising the cost of electricity to consumers and providing a more reliable supply of energy. The management company also pledged to meet certain renewable energy targets and customer service initiatives for New Providence and the Family Islands. Given the deterioration in the generation, transmission and distribution of electricity in the Bahamas over the years it is imperative that the reforms planned for the sector, via the management company, stimulate the economy and boost the job market in the Bahamas. Weekly_Market_Recap_11-Mar-2016 Click here for full Weekly Market Recap
Financial Market Brief Feb 26 2016
On Thursday Jamaicans went to the polls and voted out the People’s National Party (PNP) led by 70 year old Portia Simpson, Jamaica’s first female prime minister. The opposition party, the Jamaica Labour Party (JLP), led by the 43 year old Andrew Holness was narrowly voted into office. According to the electoral polls, the PNP was projected to win the election. However, following a hard-fought election, the JLP eked out a win with promises of job creation, income tax cuts, accountable and responsive governance, economic growth and major improvements in education and healthcare. The PNP government was however credited for improvements in the country’s fiscal position which included debt reduction and the implementation of various economic and stock market reforms. Weekly_Market_Recap_26-Feb-2016 Click here for full Weekly Market Recap
Financial Market Brief Feb 19 2016
From all indications, it appears that the implementation of the National Health Insurance (NHI) scheme will be delayed. The Prime Minister indicated that it is more important to get the NHI process right than to adhere to a timeline that was outlined for the scheme. It is believed that the delay was mainly due to the slow pace in registration and the inability to get insurance companies and doctors to endorse the government’s version of the plan. This column believes in universal healthcare and that all citizens should have access to affordable, high-quality medical care. Weekly_Market_Recap_19-Feb-2016 Click here for full Weekly Market Recap
Financial Market Brief Feb 12 2016
Following the downgrade of the Bahamas’ local and foreign credit rating to BBB-/A-3 from BBB/A-2 on August 25, 2015, Standard and Poor’s (S&P) stated that there was a greater than one-inthree chance that it could cut the rating again within the next six to twenty-four months if the country’s short and long term economic vulnerabilities deteriorate further. Later this month, government officials will meet with S&P analysts for a continued assessment of the country’s ability and willingness to meet its debt obligations in full and on time. During this process, S&P will look at several economic, political and social factors to appraise the Bahamas’ overall creditworthiness. We identify some of the quantitative economic and financial variables below that may be used this month by S&P in determining the Bahamas’ sovereign credit rating. Weekly_Market_Recap_12-Feb-2016 Click here for full Weekly Market Recap
Financial Market Brief Feb 5 2016
One of the consequences of the 2008 global financial crisis was a substantial accumulation of public debt by governments in industrialized countries, including the Bahamas. To date, fixing public finances remains a challenge for these countries. Over the past seven years, the Bahamas has seen a sustained deterioration in its debt ratios. With the government continuously running deficits, the Bahamas’ total debt share will certainly continue to increase. In total, the Bahamas now owes $6.51B, which is equivalent to 76.51% of GDP. Less than a decade ago, in 2008, the debt to GDP ratio stood at a healthy 38.96%. This deterioration in public finances can be attributed to an equally substantial increase in the GFS deficit to GDP from 1.83% in 2008 to 4.49% in 2015, after peaking at 6.48% in 2013. Weekly_Market_Recap_5-Feb-2016 Click here for full Weekly Market Recap
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