The Tribune

By ANNELIA NIXON

Tribune Business Reporter

anixon@tribunemedia.net

A Cabinet minister says The Bahamas must further strengthen its public finances, reduce the leakage of tourism dollars and diversify supply chains to withstand the fall-out from US trade and tariff policies.

Michael Halkitis, minister of economic affairs, told the Society of Trust and Estate Practitioners (Bahamas) conference that this nation will inevitably feel the effects from the eruption of a fully-fledged trade war involving China, Canada, Mexico and the US given its status as a small, vulnerable and import-dependent economy. However, he was adamant the US will remain a significant trading partner for The Bahamas.

“The US is our major trading partner by far, and they will continue to remain our major trade partner,” Mr Halkitis said. “And most of our visitors come from the US. Most of the goods we import comes from the US, for all the reasons of proximity, etc. In terms of trading relations, in the Caribbean, we are a member of CARIFORUM, the regional trading arrangement.

“And recently, as part of our efforts to impact the cost of living, in particular the cost of food, we’ve been engaging in an effort to find different sources of some of the things that we consume; find ways where we can get those things to us directly, instead of going through the US and that added element of cost. We have been working with some Bahamian companies and Bahamian logistics companies to be able to impact that.”

Mr Halkitis said that while The Bahamas benefits from its membership of CARIFORUM, a grouping of Caribbean, African and Pacific states, which seeks to foster trade and economic dialogue, it must be “very conscious of change in global policy as it relates to trade and the impact that would have on The Bahamas”.

“Even though we’re not directly the subject of some of these policies that are tweeted out in the middle of the night, eventually we are impacted,” Mr Halkitis said. “And so we’ve seen eggs have become sort of the proxy for inflation. These are some imported from the south, from the Dominican Republic.

“And there’s some opportunities for other products that we consume, a lot to be sourced directly, of course, respecting all phytosanitary [measures] in terms of food and as well [as] health and safety, product quality standards throughout.

“But the idea is, for example, in Guyana, they produce a lot of agricultural produce. The president of Guyana has indicated that he wants Guyana to provide all of the animal feed to support agriculture in the region. The idea is: How do you get it from there to The Bahamas, there to some of the other islands, without the added cost of going through the US?” he continued.

“So I think the recent sort of shifts and policy, and we’ve all seen a brewing trade war. It’s not a full-fledged trade war. Even though we are not direct targets of it, some of the tariffs and some of the policy, we will be impacted. I saw an article about some effort or some intention by the US to fine or charge Chinese goods that’s coming to their ports.

“And, you know, how would that impact us, given the dominance of China in marine transport? And so, like I said, we are not direct targets of some of this action but we will feel the impact,” Mr Halkitis said. “My view is we’re small players, price takers, importers.

“What we have to do is increase our trade region, explore the logistics of being able to buy and sell to each other to reduce costs. I think what we have to do in The Bahamas is continue to strengthen our public finances, in my opinion, to ensure that we are in a position to withstand some of the, perhaps, economic fall-out in terms of possible recession, slowing in growth and, in the medium-term, in the longer-term, you have to look to things like that.

“All the stuff that we’ve been talking about for 60 years, linkages, you have 11m tourists come here but 90 percent of the money goes right back out to imports. So how do we have some import substitution, growing of agriculture, other industries, to make sure some of that money stays here?

“We have this conversation a lot. Had it after 9/11, we had it after the pandemic, about how do we begin to chip away at that reliance? And I think, again, what’s happening, the world is basically turning upside down and very unpredictable.”