Wednesday, November 4, 2020

Complete Tourism Rebound Pushed Back Until 2023

John Rolle

Tribune Business Reporter

Tourism's full rebound has been delayed until 2023, the Central Bank's governor predicted yesterday, as he conceded that The Bahamas' recovery from COVID-19 is "further behind than expected".

John Rolle, unveiling the Central Bank's 2020 third quarter assessment, said the pandemic "continues to weigh negatively on the Bahamian economy" with foreign currency earnings from tourism, investments and other export sectors having contracted by one-third year-over-year for the nine months to end-September.

This, he added, had resulted in a net $750m foreign currency outflow from The Bahamas over the same period even though the demand for US dollars to pay for imports and other overseas imports had fallen by almost 15 percent. That decline was due to a combination of tourism's shutdown and lower consumer spending, the latter driven by higher unemployment and loss of incomes.

While proceeds from the Government's foreign currency borrowings, including the recent $600m sovereign bond issue, the gap produced by the $750m net outflow, Mr Rolle said these actions had only delayed pressures on the external reserves - the key support for the one:one US dollar peg - until the 2021 first half.

Hinting that both these reserves and the peg will come under growing stress early in the New Year unless The Bahamas kickstarts its tourism industry, or finds an alternative foreign currency earnings source, the Central Bank governor issued a stark warning that Bahamians must not under-estimate "the severity of the immediate headwinds facing the economy".  Read more >>