Financial Market Brief 1 July 2016
As we have crossed the half-year mark we present a review of the country’s public finances and a status report on the government’s fiscal reforms announced over two years ago. The year 2015 was a challenging year for the Bahamas and can be characterized by a series of economic highs and lows. The relatively smooth implementation of the new Value Added Tax (VAT) at the beginning of the year, mainly due to the assistance of the private sector, is on the list of highs. Topping the list of lows were the stalled Baha Mar development and Standard & Poor’s downgrade of the Bahamas’ sovereign debt rating to BBB-/A-3 from BBB+/A-2, which was in large part due to the failure of Baha Mar whose opening was expected to deliver a much needed economic boost. While policy makers approached 2016 with optimism, so far, it does not appear that economy is in any better shape than it was in 2015. With the implementation of VAT, the Government has been successful in reducing the deficit from an all-time high of $546.14 million or 6.50% of GDP during fiscal year (FY) 2012-13 to $382.00 million or 4.31% of GDP at the end of FY 2014-15. For the first nine months of FY 2015-16, however, the government missed its deficit target, recording a GFS deficit of $254.11 million compared to a projected GFS deficit of $141.0 million for FY 2015-16. The government is now ambitiously projecting a GFS deficit of $100.0 million or 1.1% of GDP for FY 2016-17. Weekly_Market_Recap_July_1_2016 Click here for full Weekly Market Recap

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