The Tribune

By NATARIO McKENZIE Tribune Business Reporter nmckenzie@tribunemedia.net A GOVERNMENT minister has suggested that the Bahamas will eventually be "rid" of exchange controls via gradual liberalisation, although they have served this nation well during the global economic crisis. During a Wednesday night Economic Resiliency Forum at the College of the Bahamas (COB), Central Bank governor, Wendy Craigg, said that due to exchange controls very few Bahamians were exposed to the crisis that erased some $7 trillion worth of shareholder value in the US. "Because these arrangements have been included, that means very few Bahamians would have had investments overseas, and they would have been less exposed to the crisis which erased some $7 trillion of shareholders' wealth in the US," she said. "It also impacts the way the commercial banks would interface with the external environment. Right now, the commercial banks have a very large amount of excess liquidity. They cannot just take that excess liquidity and invest it overseas. "They also have to adhere to a certain framework that the Central Bank has in place for the conversion of those funds. Their experience has not been a very damaging one for the commercial banks. They have not been exposed to those toxic assets that other entities would have been exposed to. It's limited the impact of the crisis on the Bahamian economy." Mrs Craigg added: "That's not the rationale for exchange controls. That just so happened to have been the outcome of having exchange controls in place. Exchange controls are there to support the fixed exchange rate regime." Kenwood Kerr, president of Providence Advisors, agreed, saying: "I think it has done the Bahamas well against the backdrop of the global economic crisis. "The only argument you can make is that the local investor businessman, who may want to access foreign capital or lower cost capital, may not have the same flexibility to access that capital. To that extent we should liberate. I think there was a recommendation in the BISX stock exchange report of 2003, which spoke to the point of gradualism. We are on that path to liberalisation. We think gradualism is the way to do it." Zhivargo Laing, minister of state for finance, added: "I see a day when we are rid of exchange controls. I think there ought to come a day when we can have a more liberal exchange control regime. "We have an emotional tie to our currency's equality with the US dollar. In an exchange control liberated environment, something has to give, so we have a fundamental decision to make on when we do that and what the implications are for this equity we enjoy."