The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A DEBT and cash management committee has been formed to create a medium-term debt strategy for the Bahamas, Central Bank governor Wendy Craigg has confirmed.

Speaking at the recent Economic Resiliency Forum at the College of the Bahamas (COB), Mrs Craigg said: "You simply cannot continue to accumulate debt. We have to be able to reduce the level of the debt, reduce the fiscal deficit and come to a more sustainable position. This is something the Central Bank is looking into.

"The Central bank is working long with a tripartite team, the Central Bank, Ministry of Finance and the Treasury. We have established a debt and cash management committee, where we are looking to, with the assistance of the International Monetary Fund (IMF), create a medium-term debt strategy for the Bahamas, so that we can address this very factor in order to have more sustainability going forward."

A report by the IMF last December noted that failure to rapidly implement tax reforms "could jeopardise a sustained recovery" in the Bahamas. It also warned that the Government's plans were "not sufficient" to reverse a rising $4.25 billion national debt and fiscal deficits set to average 4.25 per cent of GDP over the next four years. The Central Bank recently disclosed a modest year-over-year improvement during the first half of the Government's 2011-2012 Budget year, with the total fiscal deficit down by $50.6 million or 23.6 per cent

According to state minister for finance, Zhivargo Laing, improving tax collection, the extent to which the Government can reduce subsidies to public corporations and reducing wastage in government are among several objectives that can put the Bahamas in a better position to curtail the growth rate of its debt.