On Wednesday last the International Monetary Fund announced that its executive board approved the disbursement of US$250 million to The Bahamas.
“The economic outlook remains subject to an unusually high degree of uncertainty.”— Tao Zhang, deputy managing director and acting chair, International Monetary Fund
The emergency financial assistance comes under the IMF’s Rapid Finance Instrument, representing 100 per cent of The Bahamas’ quota, and will help meet the country’s balance of payments needs due to the coronavirus (COVID-19) pandemic. It will also boost the archipelago’s COVID-19 response while opening doors for other global financial partners to provide support.
The IMF’s support comes at a time when The Bahamas has had to deal with back-to-back catastrophes.
“The Bahamas was just recovering from the widespread destruction caused by Hurricane Dorian in the fall of 2019, when the pandemic led to a sudden stop in tourism, generating sizable fiscal and external financing needs. The economic outlook remains subject to an unusually high degree of uncertainty,” Tao Zhang, deputy managing director and acting chair, said in an IMF-issued statement.
To stem the spread of the virus and lessen its impact on the economy, the Government of The Bahamas declared a state of emergency in March, closed air and sea borders, and established an Economic Recovery Committee to guide the country’s COVID-19 response and recovery efforts.
In addition, the authorities have introduced targeted fiscal measures to support the healthcare system, employment, and the most vulnerable segments of the population.
Tao has commended the Government’s policy response efforts, calling it “appropriate”. He also recommends that once the crisis has eased, the country should combine and prioritise its financial obligation to achieve targets under the Fiscal Responsibility Act.
However, the measures to contain the outbreak have halted tourism activities, The Bahamas’ main foreign exchange earner, further causing a deep recession and creating large external and fiscal financing needs.
As such, Tao pointed out, “The disbursement under the RFI will help boost resources for essential COVID-19related outlays, strengthen reserves and catalyse additional support from other international financial institutions, development partners, and the private sector.”