NASSAU, BAHAMAS— The country’s foreign exchange inflows in the first months of this year have already exceeded last year’s performance by 40% and are expected to exceed the pre-pandemic high of $6 billion recorded in 2018.
Central Bank Governor John Rolle at a press briefing yesterday noted that tourism is still completing its recovery and that private sector foreign exchange inflows via commercial banks are on track to surpass record highs. before the pandemic.
“This reflects the added boost of large and growing foreign investment flows, in areas such as residential real estate and tourism infrastructure, both of which have boosted construction activity. In the first nine months of 2022, measured currency inflows increased by 40% compared to 2021. This leaves the forecast results for 2022 on track to surpass the pre-pandemic high of $6 billion recorded in 2018” , Rolle said.
He added: “As part of a more sustainable combination of inflows and use of foreign exchange, the private sector contributed nearly half of the estimated $746 million growth in external reserves over the nine first months of 2022. In 2021, on the other hand, the sector was still making a net drawdown on reserves. As of today, reserves stand at approximately $3 billion. For the remainder of 2022, sales are expected to decline, consistent with the normal seasonal pattern of high net imports in the third and fourth quarters. However, sales are still expected to end the year higher than they were at the end of 2021.”
On monetary conditions, Rolle noted that domestic credit trends for the private sector remained contracted in the first nine months of the year and are only expected to turn mildly positive in the near term.
“In the context of stronger deposit growth, system liquidity should therefore remain high, preventing average deposit rates from rising. It is in this context that retail depositors are particularly encouraged to invest more in available medium and long-term government domestic bonds The Central Bank will target this market segment, as it is working with the government to introduce a system of savings bonds Existing liquidity already supports stable to increased investments in public instruments by financial institutions and institutional investors.As for credit quality, an improving trend has also been established.The delinquency rate on loans to the private sector has gradually decreased over the past year. year 2022. In this context, the Central Bank also continues to deliberately aim for a significant medium-term reduction in delinquencies. reducing the delinquency rate and increasing the pool of qualified borrowers, both of which are favorably influenced by overall economic conditions, are important in stimulating more lending,” Rolle said.
Rolle noted that among the policies the Central Bank has signaled or is about to announce is the expanded ability for banks and credit unions to lend to the private sector, against more relaxed debt service thresholds and less stringent deposit requirements.
The second policy change is the announced limited window in which domestic investors can purchase Bahamian government currency bonds, without having to pay the 5% investment premium in the currency market.