Bahamas to borrow US$200 million to weather crisis

NASSAU, Bahamas, February 27, 2009 – Prime Minister Hubert Ingraham has announced plans to borrow US$200 million from a group of banks to help the country pull through the global economic crisis.
 
He announced in a mid-year economic report that his administration is arranging the loan from a consortium of banks which will provide funding for the stimulus programme and offset revenue shortfall in fiscal 2008/09.
 
“Legislation seeking the authority for this loan will shortly be placed before Parliament,” he said this week, although he did not give any details about the banks which would be assisting.
 
In his address, Ingraham reported that the effects of the global economic crisis on Bahamian economic performance and prospects were “evident and stark”.  
 
“Domestic economic conditions were lackluster in 2008, especially so during the second half of the year,” he said. “Staffing reductions, largely concentrated in the tourism sector, and a stalled pace of job creation in the foreign investment-supported construction sector suggest an upward trajectory in the unemployment rate from the mid-year estimate of 8.7 per cent in 2008.”
 
The Prime Minister said that the progressive weakening in tourism activity has coincided with the deepening of the economic malaise in the United States economy, which accounts for over 80 per cent of the total visitor count.  
 
During 2008, total visitor arrivals fell by 4.6 per cent to 4.4 million relative to the same period in 2007, with the respective falloffs in air and sea traffic of 6.4 per cent and 3.8 per cent.  
 
“Some 1,200 jobs were eliminated in the hotel sector during 2008, and another 300 in 2009, and work weeks and work hours for many employees in the hotel sector have been reduced,” Ingraham reported.
 
He made it clear that there can be no broad single-stroke response to the global crisis but, rather, “measured and incremental responses must be available as the crisis develops”.    
 
“My government and our institutions with financial and economic responsibility – the Central Bank and the Ministry of Finance – are monitoring developments closely and providing data and analysis which is enabling my government to ensure that the Bahamian economy takes maximum advantage of the turnaround, as and when it occurs,” he said.
 
“The government is ensuring, with every means in its power, that the Bahamian economy is not stagnating beyond the level of the burden imposed by the global crisis.”