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Financial Market Brief May 27
In early April 2016, the phrase ‘Panama Papers’ was coined following the unprecedented leakage of over 11.5 million files from the data base of Mossack Fonseca, the world’s fourth largest offshore law firm. The stolen information was first leaked to a German newspaper which gave the data to the International Consortium of Investigative Journalists (ICIJ). The ICIJ then passed the information on to its large network of global media partners. The information underwent a detailed analysis for over a year before it was released to the public. Among the information disclosed, were over 140 politicians and associated persons with offshore accounts. So far, a major causality stemming from the release of the Panama Papers was the resignation of Iceland’s Prime Minister, after it was revealed that he and his wife co-owned an undisclosed company setup in the British Virgin Islands to hold personal investments. Weekly_Market_Recap_27_May2016 Click here for full Weekly Market Recap
Financial Market Brief 20 May 2016
The second economic priority for the Government of the Bahamas is to create an environment that will result in a substantial reduction in the country’s structurally high unemployment rate. Structural unemployment is a form of longer-lasting unemployment where, “at a given wage, the quantity of labour supplied exceeds the quantity of labour demanded because there is a fundamental mismatch between the number of people who want to work and the number of jobs that are available. The unemployed worker may also lack the skills needed for the job.” Unemployment is one of the key economic challenges facing the Bahamas. This high rate of unemployment creates a series of problems for the Government’s budget, as funds which could otherwise be allocated to productive use, must now be redirected to an increasing number of social services programs. Weekly_Market_Recap_20__May-2016 Click here for full Weekly Market Recap
Financial Market Brief 13 May 2016
The Bahamas’ economy has been contracting for the last two years. This negative growth environment is the prime cause of the government’s relatively high deficit and debt levels as well as the structurally high longterm unemployment rate. The need for growth is urgent and those responsible for creating a robust economic environment must act now to improve the country’s growth outlook. Sustainable, long-term economic growth is not tied to one single large scale investment, but rather a combination of economic factors which include the level of consumer demand, access to credit, an adequately skilled workforce, private business expansion and modern infrastructure. We recommend the following as a starting point to put the country on a path to economic growth and prosperity. Weekly_Market_Recap_13__May-2016 Click here for full Weekly Market Recap
Financial Market Brief May 6 2016
Based on the Bahamas’ current economic model, the tourism industry is vital to the country’s economic survival and remains an important economic indicator for assessing the health of the Bahamian economy. The industry has evolved over the years from total visitor arrivals of 1.62 million in 1981 to 6.11 million in 2015. Additionally, visitor expenditures in 1981 were $639.10 million compared to $2.30 billion in 2014. From a cumulative perspective, it would appear that the Bahamas’ tourism industry has thrived over the past 34 years. However, a more in-depth analysis reveals that while sea and cruise arrivals have skyrocketed from 596.87 thousand visitors in 1981 to 4.72 million visitors in 2015, stopovers, the more lucrative visitor category, have not fared as well. Over the past 34 years since 1981, stopover visitors have only increased by 361,142 visitors. Actually, the current stopover/air visitor arrival numbers of 1.39 million is lower than the stopover/air arrivals of 1.47 million in 1987. Over the past ten years, from 2005 to 2014, the Bahamas has averaged a mere 2.46% increase in total tourist spending. Weekly_Market_Recap_06_May-2016 Click here for full Weekly Market Recap
Financial Market Brief Apr 22 2016
Rating Agencies maintain the status quo on Bahamas’ Sovereign Debt Rating and Outlook The Bahamas was spared a downgrade by both of the major rating agencies following their routine credit assessments. On April 15, 2016, Standard & Poors (S&P), which downgraded the Bahamas last summer, affirmed the Bahamas’ BBB-/A-3 sovereign credit rating for both foreign and local currency debt. The rating agency cited continued improvements in the government’s fiscal consolidation efforts due mainly to Value Added Tax (VAT) receipts, which exceeded expectations. S&P also asserted that the country’s declining fiscal deficit, supported by healthier external conditions have offset the country’s relatively low growth rate and increasing debt stock. For the year 2015, the government collected a reported $535.62 million in VAT revenues. This boost in revenues has contributed to an increase of $431.47 million in tax revenues over the calendar year 2014. Weekly_Market_Recap_22-Apr-2016 Click here for full Weekly Market Recap
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
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