The Tribune

The Central Bank has "agreed to roll over" the $232.3m IMF special drawing rights (SDR) financing it provided to the Government as part of the latter's 2023-2024 borrowing plan, it was revealed yesterday.

Simon Wilson, the Ministry of Finance's financial secretary, confirmed to Tribune Business that the banking regulator had agreed to extend the "loan" beyond year-end 2023 when it was due to be repaid in part or fully.

Speaking after the Government unveiled its 2023-2024 annual borrowing plan, he described efforts to improve transparency around The Bahamas' fiscal performance, strategies and outlook as "a really big deal" that will result in lower debt and borrowing costs in future years.

Besides engaging a third-party contractor to develop an investor relations website for The Bahamas, the borrowing plan also pledged "to promote transparency and predictability" in government debt operations through the publication of bond issuance dates and auction details in advance.

"It's making information more readily available for investors, which in turn lowers [debt] costs," Mr Wilson explained. "As investors get more information on a country, they tend to price that country as less risky..... It's a big deal. I think these are all small building blocks, but I think in a couple of years this will be a big deal; a really bug deal."

While unable to recall the name of the contractor developing the investor relations website, he added: "I think that will be ready to be launched in the next couple of weeks. I know it's a firm that has done sites for a couple of municipalities in the US and a couple of international clients."

The borrowing plan said: "To promote transparency and predictability of these operations, the Central Bank, as fiscal agent for the Government, will publish 15 days before the beginning of each quarter the bond issuance schedule on its website, detailing indicative volumes and tenor of issues and corresponding dates of the upcoming offerings.

"Operational transparency will also be enhanced by publication of auction details (minimum, maximum, and average prices) immediately after finalising the auction decision. This will include the release of summary details on the various investor categories purchasing government securities so as to enhance awareness of the breadth of the market appetite across the various maturity buckets."

As for the new website, the borrowing plan added: "The Government will work together with market players and investors to better understand domestic market development practices and design approaches that will promote efficiency and transparency in these operations, and simultaneously obtain feedback for improving the design of the medium term debt management strategy.

"To enhance these activities, the Ministry of Finance has engaged a leading cloud-based investor relations and debt management platform to develop an investor relations website for The Bahamas. The goal is to create a well-organised, easy to navigate site that contains all fiscal and financial reporting of the Government as well as any other important macroeconomic data and external reports that will help investors make informed investment decisions.

"The website will also facilitate the production and distribution of virtual roadshows and provide a point of contact for visitors to submit questions/requests." Pointing to further reforms, the borrowing plan added: "The introduction of competitive bidding for bonds in October will provide for more efficient pricing of these securities.

"The launch of the Government's savings bond during the second quarter of fiscal year 2023-2024 will aid in broadening the participation of small investors. Although the Government has loan maturities of $135m in fiscal year 2023-2024, the borrowing plan makes no provision for raising new Bahamian dollar loans, instead focusing on incrementing the issuance of bonds and Treasury bills.

"Of the total $2.068bn in maturing obligations, $802.2m (38.8 percent) represents domestic bond redemptions which the Government intends to refinance with new issuances. Based on the persistence of strong excess liquidity conditions, the borrowing plan also anticipates securing an additional $120m in domestic bonds for a total issuance of $922.2m....

"The Government also plans to increase the level of outstanding Treasury Bills by a net of $45m and utilise Treasury Bill issuances intra-year to smooth out short-term cash flow requirements."