People sit under broken palm trees outside the Leonard M. Thompson International Airport after the passing of Hurricane Dorian in Marsh Harbour, Abaco on Thursday. (AP Photo/Gonzalo Gaudenzi)
By NATARIO McKENZIE
Tribune Business Reporter
nmckenzie@tribunemedia.net
While the country’s mid-term growth prospects are still positive, the Central Bank has noted that Hurricane Dorian will have a negative impact on the economy in the short-term.
In its monthly economic and financial developments report for July, the bank noted: “Medium-term growth prospects are still positive for The Bahamas. However, the unprecedented devastation caused by Hurricane Dorian to the northern islands of The Bahamas and the disruption in travel itineraries to many airports during this period, will negatively impact the economy in the short-term.”
It added: “Rebuilding efforts in the aftermath of the storm and the return to normal conditions in several tourism markets which were not severely impacted, will temper these overall adverse effects. The pace of recovery of hotel room inventory will impact the speed at which the economy returns to normal. In the coming months, the measures implemented to rebuild and replace vital infrastructure, combined with efforts to assist those residents and businesses adversely affected by the storm, could hamper the Government’s fiscal position.”
The regulator noted financing needs are likely to be met in part by inflows from several multilateral lending facilities; thereby “mitigating the pressure on domestic funding sources”.
“In the private sector external re-insurance inflows are anticipated to cushion business and household financing needs, however recovery gaps are likely for impacted persons and entities without adequate insurance protection,” the bank reported.
It added: “The hurricane’s near-term impact on external reserves will materialize over the remainder of 2019 and most of 2020. Balances could still experience a net accumulation in 2019, as re-insurance and other external proceeds are placed on deposit for drawdown during rebuilding efforts. More of the net outflows against reserves are anticipated over the course of 2020, cushioned by the seasonal upturn in performance on other tourism assets. Nevertheless, reserve indicators are expected to remain above international benchmarks.”
As to the monetary policy implications the Central Bank noted: “Given the adverse effects of the hurricane on the domestic economy and the need to support the recovery effort in affected islands, the Central Bank has relaxed lending conditions on facilities extended to distressed households and businesses. For these impacted borrowers, commercial banks will be permitted to waive the Central Bank’s mandated 15 percent equity or down payment requirement on consumer loans, and to waive Page 6 of 14 the threshold debt service range of 40 per cent to 45 per cent on new credit, that accommodates hurricane recovery.”
The Central Bank pointed out that in these instances, lending institutions have been “encouraged to adopt flexible, but prudent credit assessment criteria, tailored to the particular financial circumstances of distressed borrowers”.
Comments
Well_mudda_take_sic 5 years, 3 months ago
Many Grand Bahamians and Abaconians who have lost everything they own are simply going to walk away from the consumer loans they owe financial institutions that were obtained to buy vehicles, appliances, furniture, etc. that no longer exist. The same will apply to residential and commercial mortgage loans where the structures and other improvements were destroyed and the value of the land alone is low in relation to the outstanding mortgage loan balance. The lenders will have already reserved the right to receive any insurance claim proceeds so most borrowers will be inclined to just let the lending financial institutions and the insurers fight amongst themselves. The basic principle here is that when you have already lost everything and really have nothing more to lose, then you have nothing of value to fight for....personal credit reputation aside.
Porcupine 5 years, 3 months ago
"However, the unprecedented devastation caused by Hurricane Dorian to the northern islands of The Bahamas and the disruption in travel itineraries to many airports during this period, will negatively impact the economy in the short-term.” This storm Dorian alone, will cost many billions to our country. The Central Bank of The Bahamas must be on drugs. For them to make ridiculous statements like this is beyond irresponsible. It is down right criminal. The Central Bank exists to make make sure the bankers, who produce absolutely nothing, will continue to see their share of the world's resources increase, no matter the suffering and pain borne by those under their thumb. Banking serves the elite. The banks do not serve the people.
Well_mudda_take_sic 5 years, 3 months ago
John Rolle (CB Governor) is nothing but a tool of the Minnis-led FNM government. He will say and do whatever he is told to say and do by his political masters. Poor guy, like his predecessor Wendy Craigg, never had the stature and standing necessary for the role of CB Governor. But nether Rolle nor Craigg were anywhere as bad as wannabe economist James Smith was.
Well_mudda_take_sic 5 years, 3 months ago
Repost:
What part of the well publicized and documented fact that all of Central and Northern Abaco has been completely decimated do they not get? The same goes for much of Grand Bahama. These insurance vultures should simply be cutting cheques to the insured individuals and businesses for the maximum amount of losses covered by their insurance policies, save for third party liability coverages. Instead these insurance vultures want to delay the claims settlement process in the hope of being able to persuade traumatized and desperate survivors, who have lost everything, to sign a piece of paper evidencing their agreement to accept claim settlement amounts that are much lower than they are truly entitled to receive.
The extensive aerial video coverage that has been made public of the complete and utter destruction caused by this cataclysmic event is plently evidence enough that the insurance adjusters and catastrophe experts really have nothing at all to do in the case of the vast majority of the insurance policies. The last thing insured traumatized survivors who have lost everything need right now is stress and pressure tactics from greedy insurers seeking to minimize their insurance claim settlements.
The Insurance Commissioner of The Bahamas needs to get off of her well endowed derrière and immediately make certain expected and warranted public announcements aimed at protecting insured individuals and businesses from the well known predatory practices of property and casualty insurers. These announcements should include full page notices in The Tribune, The Nassau Guardian and The Punch, as well as public announcements on the two main local TV stations (JCN not being one of them). The announcements should also appear on the Insurance Commission's official website.
The Insurance Commission must set up a special 'Dorian' unit within her official Office to handle inquiries and complaints of aggrieved policyholders who have good reason to believe they may be victims of predatory insurance practices aimed at depriving them of the claim settlement proceeds to which they are entitled to receive at the earliest possible time. Insurers found to be engaged in predatory practices should face appropriate penalties including the possibility of their insurance underwriting capabilities being suspended pending the outcome of an investigation of their conduct by the Commissioner's Office.
gbgal 5 years, 3 months ago
Practically every business is closed in GB so hundreds are out of work. And no negative impact on the economy?? Give me a break!
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