The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Certain industries will be given “more flexibility” than others to raise financing from foreign sources should the Central Bank’s latest proposed exchange control relaxations be approved, its Governor said yesterday.

John Rolle, while not naming these sectors, indicated that they would be those playing key roles in the Bahamas’ national development, and/or having significant potential to earn foreign currency.

He confirmed to Tribune Business that the latest measures being eyed by the Central Bank were designed to boost economic (GDP) and business growth by improving Bahamian firms’ ease of access to credit.

“We do not want to pre-judge the outcome,” Mr Rolle told this newspaper via e-mail of the latest proposed liberalisation measures.

“However, the expectations is that some sectors more than others would be given more flexibility to raise financing outside the Bahamas or in foreign currency (from local sources), provided the activities are also aligning with our national development goals or would enhance our ability to earn net foreign exchange.

“We are also keeping an open mind as to how our commercial banks could be involved in any reformed outcomes.”

Tribune Business reported yesterday how the Central Bank is eyeing further exchange control liberalisation measures that would allow Bahamian companies to obtain capital and financing overseas, while also removing remove obstacles to their participation in, and the financing of, investments overseas.

The need for such reforms was further highlighted by Central Bank data released yesterday, which showed that commercial bank lending to businesses had contracted by $51.5 million for the first nine months of 2016.

Residential mortgage lending also contracted $18.3 million over the same period, as Bahamian banks focused on consumer lending, which expanded by $39.3 million. Overall, private sector credit contracted by $30.4 million in the nine months to end-September 2016, accelerating the $21.5 million decline the year before.

The contraction in commercial lending to the Bahamian private sector will be taken by many observers as a further indication of the difficulties businesses face in accessing capital for expansion and job creation, boosting the case for the Central Bank proposals.

“Our focus is on reforms that would ultimately increase growth potential,” Mr Rolle told Tribune Business, adding that the Central Bank wanted to try and ‘level the playing field’ between Bahamian and foreign investors.

He added: “We want to ensure that in areas where foreign investment is already admitted, local investors would also have more ease of taking on such ventures, to the extent that access to financing is not a constraint.

“There may also be existing sectors reserved for Bahamians, with foreign exchange earning potential or with net foreign exchange savings capacity, where we would want to rule out ease of access to funding as an inhibitor.”

The Central Bank has issued a survey to Bahamian companies, in a bid to gain data on the “issues and financial circumstances” facing businesses of all sizes.

Mr Rolle confirmed that this was intended to generate ‘hard data’ that would support the Central Bank’s case for further exchange control liberalisation.

“This is an exercise to gain an.... informed position against which the Central Bank can make recommendations to the Government for adjustments to the exchange control regime,” he explained.

“One outcome of this exercise would be to identify, in a very strategic way, locally initiated activities that would be allowed more access to foreign currency financing, while still being very considerate of the sustainability of such financing to maintaining the stability of our currency.”

Mr Rolle added: “The survey is designed to help us gauge the desire of resident businesses to obtain capital-related financing that may otherwise not be available from the banking sector, or in some other way may be prohibited because of the existing exchange controls. This will allow us to better design any liberalisation proposals that we may wish to put forward to the Government.

“The Bank has continually reviewed how the administration of exchange controls could be less burdensome on the private sector. This is not a new exercise. This time, however, we are looking more at the investment and capital raising side of the economy for additional benefits, rather than on trade or the current account where most of the past focus has traditionally been.”