NASSAU, Bahamas, CMC – The International Monetary Fund (IMF) has urged the government to finalize legislation related to VAT (Value Added Tax), as this is key to boosting investor confidence.
At the conclusion of their July 14-18 visit, a team from the IMF said it supports the authorities’ fiscal consolidation efforts in order to place the government debt on a declining path.
The team noted that the consolidation efforts which includes the introduction of VAT, is also essential to improving the growth outlook, and strengthening employment prospects.
The international lending agency stated that while economic activity continues to recover, momentum remains week .
“The fiscal consolidation process has begun, although its pace could be frustrated by delays in the introduction of the VAT,” said head of the team Mbuyamu Matungulu.
He also said the economy’s external position is also expected to improve.
“With the current account deficit declining to 16.6 percent of GDP in 2014, compared to 19.4 percent in 2013, amid a modest strengthening of the external reserves position. The financial sector remains well capitalized and highly liquid, although it continues to deal with a sizable and aging stock of non-performing loans (NPLs).”
The IMF team welcomed the soon-to-be opened Baha Mar project, saying that this will “boost tourism earnings and contain official external borrowing to shore up reserves.”
The lending agency urged continued close monitoring of credit risks and government efforts at implementing appropriate domestic and international supervisory policies.
The discussions with the Bahamian authorities were held in preparation for the annual Article IV Consultation discussions, tentatively scheduled for early November.
