The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Central Bank yesterday said the latest exchange control relaxations will “not pose unmanageable pressures”, as it moved to ease the import burden for merchants.

The regulator, unveiling liberalisation measures for goods importers or the current account, said the external reserves and currency peg woulds not be threatened - especially given the extra support anticipated increased tourism-related imports.

Confirming the implementation of measures announced previously by the Prime Minister, the Central Bank also revealed that it is increasing merchandise import approvals “across the board” to $1 million once backed by invoices and documented obligations.

“Previously, payments were subject to a delegated limit of $0.5 million for non-oil merchandise and $25,000 for oil imports,” the Central Bank added. It has also extended the same authority, already delegated to commercial banks and other authorised dealers, to increase the foreign currency limits for foreign travel from $10,000 to $15,000 once evidence of the trip is provided.

Other current account liberalisation involves increasing the $25,000 per transaction cap to the actual billed amount for invoices including port services, patent registration, commissions and royalties. And the cap on credit limits for Bahamian dollar corporate credit cards belonging to foreign companies domiciled in this nation has also been removed.

“The liberalisation proposals are not expected to pose unmanageable pressures on foreign exchange markets or on the foreign reserves of the Central Bank,” the regulator said in a statement. “Tourism inflows are expected to strengthen over the medium-term, providing support for any net increased demand for foreign exchange.

“In the business sector, where the reforms are most significant for access to foreign currency deposit accounts, impact would also be contained by the restriction that funds accumulated must be used to pay largely for imports of goods and services.”

While the non-hotel sector will still earn most of its revenues in Bahamian dollars, the Central Bank said tourism inflows through the hotel sector will continue to satisfy foreign currency demand.

It added that the increased exchange control authority delegated to banks and other financial services providers would reduce transaction costs and time for the Bahamian private sector.

“As an important benefit, these reforms shift a further significant processing of foreign exchange transactions approvals outside of the recurring purview of the Central Bank,” the regulator explained. “This is an administrative cost saving for the private sector, and for the Bank’s internal resources.

“In particular, the annual correspondence stream around the renewal of permits for foreign currency deposit accounts will cease, as will correspondences to the Bank around signatories on such accounts. For current account transactions, a higher volume of trade payments will also bypass direct Central Bank approvals. More efficiencies would materialise once the operation of the investment currency market shifts to commercial banks.”

Bahamian businesses are likely to welcome the latest round of exchange control liberalisation, which is set to take effect on February 1, 2018, and is a critical component in the Government’s plans to deregulate and reposition the economy.

Edison Sumner, the Bahamas Chamber of Commerce’s chief executive, yesterday said the private sector had spoken to the Central Bank and its governor, John Rolle, on the proposed reforms but he had yet to review the details.

“The 2018 liberalisation continues to prioritise preservation of the economy’s capacity to maintain adequate supplies of foreign exchange for trade-related payments, and to safeguard the stability of the Bahamian dollar fixed exchange rate,” the Central Bank said.

“The capital account reforms target a prudent balance, promoting economic dynamism through sustainable financial flows, which do not undermine exchange rate and financial stability.

“On the current account, the delegated authority to commercial banks and money transmission businesses (MTBs) to approve most transactions, without prior reference to the Central Bank, is being increased. This places more reliance on the operating controls within these institutions to assess the bona fide nature of transactions, and detailed guidance and training provided from the Central Bank.”