The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The Central Bank will develop exchange control liberalisation recommendations that may “take effect” in 2017, despite an “underwhelming” private sector response to its call for data.

John Rolle, its governor, said “less than 50” companies had responded to-date to its survey, which is designed to obtain empirical data that would support allowing Bahamian businesses to obtain financing overseas.

Addressing the Rotary Club of West Nassau yesterday, Mr Rolle expressed surprise at the response, saying: “This is a society where the cry is so constant about access to funding.”

In late October, the Central Bank began its public outreach on exchange control liberalisation approaches by initiating a survey of the business community via the Chamber of Commerce and several other professional associations, in a bid to gauge the current ease of access to business financing.

“The level of response to the survey has been underwhelming – much fewer than 100; but it has provided some helpful insights,” Mr Rolle said.

“The responses represent a broad spectrum of small medium and large businesses, including many in the wholesale and retail sector. Some of the larger respondents already have approvals to obtain foreign currency financing given the nature of their activities.”

    He added: “We are, however, keen to evaluate the responses from the small and medium-sized businesses, as these firms are the ones that most often speak of consistent lack of access to financing given collateral requirements, the level of interest rates and other factors.”

Mr Rolle said more data gathering would be required, and he urged the business community to submit input.

“Nevertheless, we are obligated now to formulate recommendations to the Government for reforms that could take effect in 2017,” he added.

“Our recommendations will consider the role that local banks could play, as well as non-bank channels of potential access. It should be pointed out, though, that permission to access funding through alternative sources will not equate to success in securing funding in all cases.

Mr Rolle added: “The inherent business plan risks will still dictate the attractiveness of proposals. Moreover, the expectation that funding will be at identical interest rates as advertised abroad should be tempered.

“The cost of funding and capital is inseparable from the risk of doing business within a country. A reasonable expectation is that there will be some premium on funding relative to the cost of US dollar funding for a business - equivalent in every other respect - in the US.”

Mr Rolle said reforms that made it easier for Bahamians to repatriate assets held overseas also needed to be handled with care.

He said: “There is a school of thought that we should offer an amnesty to Bahamians who have assets abroad to bring those back onshore, and to allow them to retain them in foreign currency.

“However, much more thought needs to be given to this. If the funds are not put to productive economic use, they would leave the financial system more vulnerable to crisis and risky lending practices. Nothing in the Bahamas’ regime prevents such assets from already being repatriated for direct investments.”