News & Resources
Financial Market Brief 22 July 2016
Over the next few weeks, this column will present a series of articles that will help explain the World Trade Organisation (WTO) and its relevance to the Bahamian economy. The WTO is an intergovernmental organization that deals with global trade rules between nations. Its primary function is to facilitate and govern the orderly and unencumbered flow of trade within the legal guidelines established. The WTO formally began on January 01, 1995 under the “Marrakesh Agreement” and was initially executed by 123 countries on April 16, 1994, replacing the 1948 General Agreement on Tariffs and Trade (GATT), which was also a multilateral international trade agreement. GATT was formed to effect a relatively large reduction on national tariffs and other trade barriers. The intent of GATT was also to remove the trade preferences of participating countries on a shared and mutually advantageous basis. The Bahamas was not a signatory to GATT. Weekly_Market_Recap_July_22_2016 Click here for full Weekly Market Recap
Financial Market Brief 8 July 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-in-three 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. They cited the following: the economic shock of the delay in the opening of Baha Mar and the related ongoing legal challenges; inefficiencies in the energy sector; the relatively high unemployment rate; elevated public sector debt and external debt, and the weak local economy. On August 31, 2015, Moody’s brought ‘a ray of hope’ to the country, when in contrast to the S&P’s downgrade it upheld the Baa2 credit rating and maintained the country’s stable outlook. However, less than one year later, Moody’s assessments changed when on July 1st, 2016 the rating agency placed the government of the Bahamas’ Baa2 bond and issuer rating on a review for downgrade. Judging from its report, this changed stance was due primarily to a revision in the country’s economic growth numbers by the Department of Statistics. Initially, the department reported that the Bahamian economy grew by 1.02% in 2014 and the government projected an economic growth rate of 1.5% for 2015. To the amazement of many, including Moody’s, the country’s economic growth rate was revised downward to negative 0.52% in 2014 and negative 1.66% in 2015. Moody’s has stated that the impending review action signifies that the country’s credit rating is likely to move down by one or more notches. The Bahamas is at risk of being downgraded to junk bond status if Moody’s moves its rating down two or more notches and if S&P does the same following its assessment. Weekly_Market_Recap_July_8_2016 Click here for full Weekly Market Recap
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
Financial Market Brief 10 June 2016
It is no exaggeration to say that the Bahamas is facing major economic challenges. Real or constant GDP, which measures economic growth, has contracted by 0.52% in 2014 and 1.66% in 2015. Declining and negative economic growth coupled with high unemployment and job losses in the lucrative Financial Services sector have contributed to the economic challenges that the country faces. While the country’s overall unemployment rate stands at 14.80%, youth unemployment is at an astonishingly high rate of 30.00%. At such high levels, the long-term success of the nation’s youth is restricted. There are many factors, such as low educational levels and lack of job prospects that have led to the high level of unemployment among young persons. This inability to secure quality good paying jobs is contributing to the country’s societal deficiencies and limiting the potential of upward mobility for many of the nation’s youth. Weekly_Market_Recap_June_102016 Click here for full Weekly Market Recap
Financial Market Brief 3 June 2016
The World Bank Group released its Doing Business 2016 report on Wednesday under the theme “Measuring Regulatory Quality and Efficiency.” The report is one of the most highly anticipated reports in the world for ranking how difficult or easy it is for local entrepreneurs to open and operate small to medium size businesses when complying with local regulations. The World Bank calculates its scores via 10 business driven indicators benchmarking 189 countries to determine how far each economy is from the best score for a variety of different measures. The indicators include: Starting a business; Dealing with constructions permits; Getting electricity; Registering property; Getting credit; Protecting minority investors; Paying taxes; Trading across borders; Enforcing contracts; and Resolving insolvency. For the 10th consecutive year, Singapore tops the list, followed by New Zealand (unchanged), Denmark (from 4th), South Korea (from 5th) and Hong Kong (from 3rd). Weekly_Market_Recap_27_May2016 Click here for full Weekly Market Recap
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

CFAL, Third Floor, 308 East Bay Street, P.O.Box: CB 12407, Nassau, New Providence, The Bahamas. Tel: 242-502-7010