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Economy & Business - June 2021

THE BAHAMAS: Economic recovery at the mercy of politics

According to The Bahamas’ statistics department, the economy contracted by 14.5% in 2020, pushing the country’s debt-to-GDP ratio close to 100%. Speaking in May, however, after the figures’ release, Acting Financial Secretary Marlon Johnson was more upbeat, saying: “That was at the end of 2020. I suspect that, again, just given what we would have seen in recovery from December to now, that our GDP would have reinflated, so that the [debt] ratio certainly wouldn’t be near 100% now because our GDP five months into the new calendar year, the denominator – the actual GDP number – would be in a different place. It isn’t that our economy shrank to that size because of some structural deficiency. The economy shrank due to the effects of the [coronavirus] pandemic. But certainly, where we are now in May is a vastly different place than we were then”. The suggested decline in the debt-to-GDP-ratio was confirmed by Prime Minister Hubert Minnis on 27 May when he asked parliament to approve borrowings of US$1bn to pay for coronavirus (Covid-19) mitigation policies. Minnis said that, as a result, by June 2022 government debt would have grown to US$10.38bn, which he said would be 84.3% of GDP.

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