The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank of the Bahamas is eyeing further exchange control liberalisation measures that would allow Bahamian companies to obtain capital and financing overseas, in a bid to improve credit access.

The monetary policy regulator yesterday issued a survey to Bahamian companies, in a bid to gain data on the “issues and financial circumstances” facing businesses of all sizes.

The survey, which was distributed via the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) to its members, appears to be an attempt to obtain empirical evidence that would justify another “phase” of exchange control liberalisation.

Besides potentially giving Bahamian businesses access to foreign financing sources, and cheaper, more competitive interest rates (borrowing costs), the Central Bank added that another goal was to remove obstacles to their participation in, and the financing of, investments overseas.

“The Central Bank of the Bahamas is embarking on another phase of exchange control liberalisation, with specific objectives for further relaxation of capital account restrictions,” the notice accompanying the survey said.

“This phase of the liberalisation process would provide greater opportunities for resident businesses to participate in and finance investments or obtain financing overseas.”

The Central Bank effectively acknowledged the obstacles facing Bahamian companies, especially small and medium-sized businesses (SMEs) and start-ups, when it comes to accessing financing from commercial banks and other traditional sources - especially if they lack physical collateral.

“The Central Bank of the Bahamas is aware of the concerns expressed by the small, medium and large businesses in the community, and would like to obtain a more concrete understanding of your experiences as business owners in this market,” the notice said.

“This survey will assist the bank with a better understanding of the issues and financial circumstances facing small, medium and large business in the country.

“The completed survey will assist us in fully assessing business conditions and the credit environment within which you conduct your business activities. As a result, the information collected will help us to craft a policy that is specifically tailored to encourage business growth and development. In essence, this policy will be directly informed by you, the business owners.”

The Central Bank appears to be moving more rapidly, and aggressively, on exchange control reforms since John Rolle took office as governor.

Earlier this year, the Government relaxed capital controls to allow Bahamians to make direct investments abroad, particularly in ventures that can earn net foreign exchange for the country.

Investor groups can have access to up to $5 million over any three-year period to establish a business outside the Bahamas, while a sole individual can access $1 million at a one-to-one rate.

The Central Bank also increased the sum granted to local broker/dealers for investments outside the Bahamas by $10 million per annum.

This doubled the ‘cap’ on direct investments overseas by Bahamian groups and individuals to $10 million and $2 million, respectively.

The $10 million annual increase will improve Bahamian access to higher-yielding investment opportunities worldwide. Given that the funds are distributed quarterly, the maximum three-month allocation to the Bahamian capital market will increase from $6.25 million to $8.75 million.