The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The government yesterday moved to boost The Bahamas’ own economic forecasting capabilities by enlisting the University of The Bahamas (UoB) help to create “data-driven” growth models.

Kwasi Thompson, minister of state for finance, said the two sides’ agreement will see the university’s government and Public Policy Institute (GPPI) produce fiscal and gross domestic product (GDP) growth forecasts to underpin the economy’s sustainable recovery from the twin crises of Hurricane Dorian and COVID-19.

He added that this will reduce The Bahamas’ reliance on external forecasts produced by multinational agencies such as the International Monetary Fund (IMF), and instead incorporate on-the-ground local expertise in charting a road map for the country’s post-pandemic revival.

“Today, we celebrate the launch of the Bahamas Recovery and Sustainable Growth project, which will harness the talent, expertise and resources of our very own academia to support and strengthen the government’s economic recovery plan,” Mr Thompson said of the Ministry of Finance’s agreement with the university.

“In working with the University of The Bahamas, this administration is further cementing the government’s move to a more scientific and data-driven approach to public policy. Under the project, UoB will research and determine optimal growth levels to support the government’s plan to set the country on a more sustainable macroeconomic path.

“It will expand and enhance the government’s current economic modelling, and platforms and protocol, by allowing for more suffocated analysis using a wider range of input and variables.”

Mr Thompson acknowledged The Bahamas’ challenges in generating significant GDP growth since the 2008-2009 financial crisis and worldwide recession, which has resulted in the economy expanding too slowly to create sufficient jobs for a rapidly growing population.

Pointing out that, prior to Hurricane Dorian, The Bahamas was in 2019 forecast to enjoy its first year of two percent-plus GDP growth in 12 years, he added: “This administration is focused on combating the challenge of producing growth at sufficient levels to address the full gamut of national development priorities, including fiscal responsibility targets relating to revenue, expenditure and debt.”

Drawing on data supplied by the government, the UoB team will develop models and forecasts to predict The Bahamas’ short, medium and long-term growth. This, in turn, will result in it developing recommendations to address The Bahamas’ deteriorating fiscal and economic trends.

“In the past, The Bahamas has largely relied on multinational economic modelling,” Mr Thompson added. “The models to be developed by GPPI will be specific to The Bahamas, and based on our unique economic background and expertise.

“These improvements can promote better prioritisation of limited resources and more relevant and attainable growth results..... The work of GPPI will bring about findings that can turn our economy around.”

Dr Rodney Smith, UoB’s president, said the agreement aims to produce a study that will “determine the level of growth, on a sustained basis, that our country must achieve in order to emerge out of - and move beyond - its present economic and fiscal dilemma.....

“The Ministry of Finance desires to determine the level of growth the country needs to achieve to reverse the current economic and fiscal trends toward a more sustainable financial future.”

Dr Smith, disclosing that the study will be conducted over the next 90 days, said the UoB team will feature Professor Olivia Saunders, professor of banking, finance and economics; ex-Cabinet minister and MP, Zhivargo Laing, who is executive director of UoB’s government and public policy institute; Professor Tri Lam; and Dr Jorge Baca-Campodonico, Peru’s former finance minister.

Pointing out that improved forecasting will enable The Bahamas to better influence and plan for adverse future events, Dr Smith said: “This important study is an effort to understand better the economic and fiscal future of our nation.”

“In fact, by mathematically and statistically examining the impact of various policy measures on an academically rigorous model of our economy, we may be able to choose the best policies to positively impact our economic future. We can better predict the effect of those policies on important social outcomes like employment, poverty, savings, investing and the like.

“Additionally, we can better target resources to economic sectors that can produce the greatest outputs. This is the nature of the study being undertaken, and its lasting impact will be a model available for use in the future by personnel from across the government for future planning.”