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Waterfront condos which form part of Atlantis' The Royal and Harborside Resort on Paradise Island in Nassau, The Bahamas. (Photo: 7th Heaven Properties)

IMF predicts pandemic-induced recession in The Bahamas

Waterfront condos which form part of Atlantis' The Royal and Harborside Resort on Paradise Island in Nassau, The Bahamas. (Photo: 7th Heaven Properties)

As the COVID-19 pandemic continues to ravage economies the world over, the International Monetary Fund (IMF) has indicated that The Bahamas will not be spared from its effects, given its heavy dependence on tourism.

In a staff concluding statement for 2020, the IMF predicts that the North Atlantic archipelago will face a recession for the rest of the year, only to recover fully by 2024.

“The pandemic is expected to lead to a deep recession in 2020, driven by the sharp drop in tourism and necessary disease containment measures. Real GDP is projected to decline by 16.2 per cent in 2020, followed by a modest rebound of 2.0 per cent in 2021, and to converge back to its pre-pandemic level only by 2024,” IMF staff reported

“The pandemic is expected to lead to a deep recession in 2020, driven by the sharp drop in tourism and necessary disease containment measures”

Notwithstanding, as of October this year, The Bahamas’ international reserves reached a record level of US$2.3 billion and the IMF forecasts it will remain above the minimum recommended threshold of three months of imports until the economy rebounds.

At the same time, the IMF expressed confidence that the Bahamian authorities will continue implementing COVID-19 related measures to support the vulnerable, employment and the health sector. To address these needs, on June 1, 2020, the IMF Executive Board approved financing of US$250 million under the Rapid Financing Instrument (RFI) to provide relief for the fallout from the pandemic.

International Monetary Fund signage (File photo)

“Given the substantial uncertainty about the outlook, a detailed and explicit contingency plan should be developed,” the IMF stated.

Furthermore, given the significant increase in public debt, the fund recommends that the Government of The Bahamas postpone achieving debt targets by another two years in response to the pandemic.