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Business optimism up but profits fall for 57% By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

ESPITE 57 percent of businesses suffering a decline in first-half profits, a Central Bank survey has found that nearly-two-thirds believe the economy will improve during 2019’s final months. The findings, released as part of the regulator’s analysis of developments during the six months to end-June, gave a mixed picture of both the Bahamian private sector’s performance and outlook for the

• Nearly two-thirds eye late 2019 improvement • As 68% suffer rise in first half operating costs • Yet half expect employment will increase

JOHN ROLLE

Governor: GDP growth too low for jobs to ‘gush’ By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Bahamas must “aspire to higher” GDP growth rates in the two to three percent range if it wants to see “new jobs gushing rather than trickling”, the Central Bank’s governor is urging. John Rolle, addressing a briefing on 2019 first half economic developments, warned that this nation needed to exceed its projected medium term growth rate on a sustained basis “to see a more accelerated reduction” in an unemployment rate that has remained

stubbornly over ten percent for more than a decade. “I would say that if we can get the rate comfortably and consistently above the two to three percent range, we will make more of a dent there,” he explained of the link between GDP growth and unemployment. “One has to recognise we need to be growing the economy ahead of what’s happening with the population and the diversity of its needs. There is room, with growth rates below two percent, to see some reduction in unemployment but, to see a more accelerated

SEE PAGE 8

Caps, no interest paid on digital B$ By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE digital Bahamian dollar will be non-interest earning with accounts capped at a certain amount to protect the financial system’s stability, the Central Bank’s governor has revealed. John Rolle, in a briefing on 2019 first half economic developments, said Bahamians are “not going to earn interest on sand dollars” and

will not be able to “put more than a certain amount of sand dollars in your wallet” as a means to safeguard the financial system’s integrity. The term “sand dollars” refers to the name given to the initiative to develop a digital version of the Bahamian dollar, “Project Sand Dollar”, with the Central Bank and its chosen provider, NZIA Ltd, now working to launch the test project in Exuma.

SEE PAGE 9

remainder of the year. John Rolle, the Central Bank’s governor, described the results as “varied” and added: “Most surveyed businesses noted higher costs in their operations but stable to improved operating conditions. “The outlook held by most firms was for stable to further improved conditions over the remainder of 2019, with lowered inflation expectations and healthier

employment outcomes than in the first half of 2019.” Increased operating costs are likely to have been driven by a combination of the VAT rate increase to 12 percent; the “pass through” effects of higher global oil prices in terms of energy and transportation costs; and potentially higher import prices driven by the US-China “trade war” and tariff hikes.

SEE PAGE 6

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Cut ‘terrifying’ bad loan rate by over 50% By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Central Bank’s governor wants to further cut the “terrifying” 8.7 percent loan delinquency rate by more than half despite it having fallen to its lowest level in a decade. While describing the consistent decline in nonperforming bank loans as “very encouraging”, John Rolle said even a four percent delinquency ratio was “not complimentary” by international standards. Pointing out that one consequence of high loan delinquency rates is higher interest rates and fees for Bahamian borrowers who are in good standing, he added that the proportion of outstanding bank credit in default locally is still more than double the ratio that

would strike fear into developed country banks and their regulators. Mr Rolle said a “comfort zone” for nonperforming credit, which represents loans that are 90 days or more past due, would be “a rate that is less than half of what we are experiencing” now. Based on the governor’s comments, this implies a rate of less than four percent - a ratio not seen by the Bahamian commercial banking industry since before the 2008-2009 recession. “Today The Bahamas has seen a very encouraging drop in the delinquency rate in terms of the loans that are more than 90 days without a payment being made,” Mr Rolle said during the Central Bank’s latest quarterly

SEE PAGE 7

PAGE 2, Monday, July 29, 2019

THE TRIBUNE

Compliance officers meet on EU data rule’s impact BAHAMIAN compliance officers met for a half-day seminar to discuss how new European data protection rules will impact the

sourcing and safeguarding of client information. The European Union’s General Data Protection Regulation (GDPR),

which came into effect last May, sets rules for how a company collects, uses, retains and discloses personal information on citizens

or individuals residing in any of its 28 EU member states. As an international financial and business centre that has a significant number

of European clients, the GDPR’s implementation has implications for Bahamas-based banks, insurance companies, investment firms, health services providers and any entity/industry that holds clients’ personal data. “We wanted members of the Bahamas Association of Compliance Officers (BACO) to have a clear understanding of GDPR and its potential to impact the way they do business. Non-compliance could lead to heavy fines and penalties,” said BACO’s president, Cheryl Bazard. She, together with The Bahamas’ data protection commissioner, Michael Wright, presented to the seminar last Wednesday. Although the GDPR is designed to protect data privacy for EU citizens, the Internet has no borders. This means Bahamian businesses with an online presence may need to upgrade their digital properties with regards to how personal information is collected and processed - on and offline. In setting global data protection standards, GDPR dictates companies need EU citizens’ express, informed consent to collect data from them. And individuals should only be required to share data that is directly related to accessing the functions a business provide. “GDPR now introduces a data protection officer (DPO). There is an independence from compliance,” Mrs Bazard explained. “Compliance must now work with the DPO, specifically in marketing as they send out ads and information to customers…. Furthermore, boiler plate wording in employment contracts and customer terms may not be sufficient.” She added that EU residents have the “right to be forgotten”. They can request their information and personal data be deleted. In the event of a data breach, GDPR mandates that a company’s data controller report any instance where data is not only stolen but changed, lost or

accidentally disclosed within 72 hours of discovery, said Mrs Bazard. “That means identifying and reinforcing every point in the network where there could be a possible breach; using artificial intelligence technology to reinforce points of vulnerability, monitoring for possible cyber-attacks and having the proper protocols in place if a breach does take place,” said BACO’s president. Mr Wright added: “Know where personal data is held, where it came from, who has access, what it is being used for, what is the lawful basis for that processing, and how its use is controlled.” He suggested expanding consent notices online and in brochures; explaining the option to opt out of future marketing when data might be collected; bringing an end to pre-ticked boxes and bundled consents; and ensuring customers are aware of their right to demand full details of the information held on them. The data protection commissioner said other measures may need to be taken in order to achieve GDPR compliance. These include conducting a full data audit, reviewing data collection forms and privacy notices, and re-examining processes and systems used to deal with data subjects’ rights. The latter will include new rights in relation to erasing data, data portability and use of profiling, along with supplier arrangements with third parties such as hoteliers and airlines. “We are being made more accountable now than ever before to protect individuals’ personal data. Simply visiting a website no longer implies consent for harvesting data or third-party distribution of the data collected while a person is browsing,” said Mrs Bazard. “As compliance officers its vital for our members to be abreast of global regulations so that as a jurisdiction we can be in full and proper compliance.”

THE TRIBUNE

Monday, July 29, 2019, PAGE 3

‘EARLY FALL’ TARGET TO EASE PROPERTY DEALS By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

THE Central Bank is targeting “early fall” for simplifying exchange control’s involvement with foreign residential real estate purchases as a means to eliminate unnecessary red tape. John Rolle, its governor, confirmed during a briefing on 2019 first half economic developments that there were sufficient checks in place at other government agencies to justify removing an “additional layer of process”. “It’s something we’re targeting for early fall,” he confirmed. “The proposal is to simplify and remove the exchange control process around the foreign purchase of residential real estate in the country. “The law has some fairly clear definitions with regard to real estate and how the process goes through other government agencies to acquire real estate.... We want to ensure these transactions are not taken through and additional layer of process.” Tribune Business reported last year the complaints from multiple realtors, attorneys and others about how exchange control “red tape” had dramatically slowed approvals for real estate deals involving foreign investors, and

was threatening to undermine investor confidence in this nation. They argued then that The Bahamas was “shooting ourselves in the foot” by causing multi-month delays that was resulting in “uncertainty and anxiety” among the foreign investor community, with many “wanting to get out” of this nation. The requirement for a conveyance that has been lodged with the Registry of Records, and proof this has been done, as confirmation of sale was adding four to six weeks to the Central Bank approval process. And the requirement for board minutes and resolutions was also said to have been contributing to delayed approvals, with clients and attorneys viewing this as unnecessary and possibly beyond the remit of the Exchange Control Regulations Act. Mr Rolle, in a January 2018 interview with Tribune Business, said the Central Bank was “ceasing” its demand for proof that title has been recorded via the transaction being entered into the Registry of Records as well as the request for foreign-owned corporate entities, which are selling/purchasing Bahamian real estate, to provide Board approvals and resolutions relating to the deal. Meanwhile, Mr Rolle said The Bahamas’ foreign currency reserves “grew at

Skilled workforce is ‘critical for tech hub By NATARIO MCKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net TRANSFORMING Grand Bahama into a “technology hub” involves far more than attracting investors, a Cabinet minister has conceded, with developing a skilled workforce “a critical part” of its plans. Senator Kwasi Thompson, minister of state for Grand Bahama, while addressing a recent financial technology (Fintech) seminar hosted by the Bahamas Financial Services Board (BFSB), said this niche represented a natural evolution for the Bahamian financial services industry. “It is also very much in line with the government’s digital transformation program and our stated policy of making Grand Bahama a technology hub,” said Mr Thompson. “Our tech hub initiative steadily progresses, and involves far more than just attracting tech companies to The Bahamas. “Yes, there is good infrastructure, tons of available and affordable office space, no real property tax, but there is also the built-in Customs duty exemptions for every licensee of the Grand Bahama Port Authority and also the ability to receive similar duty free exemptions outside the Port area with the government’s east and west concessions. Building our human capacity needs is a critical part of building the right ecosystem.” Mr Thompson said there are four more technology companies under consideration by the Bahamas

Investment Authority (BIA) for approvals, in addition to previously-announced investments by the likes of Dev Digital and Skyward Tech. He added: “We have incorporated technology in our school’s infrastructure through the Ministry of Education’s digitisation project, and have created even more educational opportunities for Bahamians by providing free tuition at BTVI and University of the Bahamas. “I have asked both local institutions to give even greater focus on widening the range of technology programmes. Youth programmes were designed to introduce technology to high school students. These programmes include the BTVI ICT Programme and the YMCA ICT Programme. “The ICT Skills Development Summer Programme was created in partnership with BTVI. This year’s programme benefitted 300 students in New Providence and 100 in Grand Bahama. By the end of this year the programme would have produced 400 high school students from both years of the programme, who are ICT trained and will have CompTIA certification. These numbers indicate a strong ICT-trained Bahamian foundation for potential incoming tech companies.” Mr Thompson added that the government is moving to modernise and transform its services, having signed an agreement with the InterAmerican Development Bank (IDB) to finance the project.

double the pace” of 2018’s first half to end June 2019 at just over $1.5bn. “Driving this performance, there was a more than doubling in the net amount of net foreign exchange purchased by commercial banks from the private sector that were subsequently sold to the Central Bank,” he added. “A part of this, though, was also that the private sector’s spending on imports appeared to be reduced in comparison to 2018. The subdued spending on imports would have reflected continued reduction in total credit to the private sector, which is an important financier of imports. Another probable factor, not directly measured, was that the VAT rate

change increased the cost of imports.” Mr Rolle also told the Government and large corporate entities that any “large-scale transactions”, involving either equity or debt, should include foreign currency as an “essential” component so that Bahamian households and small firms are not crowded out of local currency credit. The Central Bank governor added that there needed to be a reduction in surplus bank capital, as most institutions were well above the regulator’s reserve requirements, and any excess could potentially be used to fuel a risky credit boom. However, the payment of dividends by the Canadian-owned banks to their

parents - one way to effect such a reduction - needed to be managed against the need to maintain healthy external reserves. “We note that there are no pressing risks to financial stability, but there are vulnerabilities that need to be tackled. One is the Central Bank’s assessment that it is in the Bahamas’ interest to manage a gradual reduction in surplus capital from within the banking system,” Mr Rolle said. “Capital levels are comfortably in excess of our minimum requirements, and more than adequate to absorb extreme, surprise loses that the average bank might encounter from severe shocks. “Continuing to tolerate

such excesses, in the Central Bank’s view, would only increase the mediumterm likelihood that lending institutions would take on riskier activities to generate comfortable returns on these surpluses. Unwinding would involve a multi-year outflow of dividends by foreign banks that must be factored into our projections for healthy external reserves balances.” And, with excess commercial banking liquidity of $1.837bn representing a similar threat in terms of fuelling “too rapid a pace of credit growth in the future”, Mr Rolle said the Central Bank will continue to selloff its government debt holdings to help soak this up.

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PAGE 4, Monday, July 29, 2019

THE TRIBUNE

Bahamas marketed at largest aviation event THE Bahamas had a strong presence at the world’s largest general aviation show in a bid to attract more private pilot visitors to the destination. The Ministry of Tourism and Aviation was out in full force at the 2019 Experimental Aircraft Association (EAA) AirVenture Oshkosh Show, held from July 21-28 in Wisconsin. Now in its 50th year, the EAA AirVenture Show is the largest of its kind in

the world, attracting more than 500,000 pilots, aviation enthusiasts and media and industry professionals, as well as over 10,000 aircraft. The Ministry’s team, led by Captain Greg Rolle, senior director of sports and vertical markets, and Frederick Donathan, aviation consultant, also contained executives from the Royal Bahamas Police Force (aviation arm) and Bahamas Customs Department. “The Bahamas receives

an injection of a substantial amount of dollars into its economy from general aviation business derived from this show, which is especially beneficial for our Family Islands,” said Captain Rolle. “Just two days into this year’s show, we have already registered some 300 private pilots who attended our seminars and are interested in flying to The Bahamas. We have also received an unprecedented number of

MINISTRY of Tourism and Aviation staff members stand at The Bahamas’ booth to answer aviators’ questions prior to the EAA AirVenture Oshkosh gate opening. From left: Leonard Stuart, Ahmad Williams and Aram Bethell.

THE INTERNATIONAL Federal Partnership moved into a new pavilion at this year’s 2019 Airventure Oshkosh. On hand to join in the ribbon cutting exercise were all 17 federal government agencies and member countries, including The Bahamas’ aviation team. inquiries and expressions of interest from visitors and other private pilots visiting our booth.” In 2018, The Bahamas attracted more than 122,000 private pilots, up from the previous year’s 92,000, and generating $387m for the economy. The Bahamas is also the leading destination in the Caribbean and eastern seaboard for general aviators #bahamasflying, #bahamasflyaway, #osh19. The Bahamas is one of three nations, together with the US and Canada, that are members of the International Federal Partnership (IFP), consisting of federal government agencies committed to education, improvement and protection in aviation.

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MINISTRY of Tourism and Aviation chiefs attend a special anniversary reception. From left: Leonard Stuart, district manager; Captain Greg Rolle, director of sports and vertical markets; Mark Baker, president, AOPA; and Frederick Donathan, aviation consultant.

THE TRIBUNE

Monday, July 29, 2019, PAGE 5

GOVT’S TRAINING FOCUS TO UNDERPIN TECH HUB THE government is focusing on education and training to help build the skilled workforce necessary to underpin its technology hub ambitions, a Cabinet minister says. Senator Kwasi Thompson, minister of state for Grand Bahama in the Office of the Prime Minister, updated the Grand Bahama technology hub steering committee on the government’s plans during a recent meeting at the British Colonial Hilton. The committee was established to advise on how the “technology hub” ambitions can be realised. “We see education as an endless door of opportunities for Bahamians from all walks of life,” Mr Thompson said. “We have incorporated technology in our schools’ infrastructure through the Ministry of Education’s digitisation project, and have created even more educational opportunities for Bahamians at the University of The Bahamas and BTVI.” Information and communications technology (ICT) initiatives at the Bahamas Technical and Vocational Institute (BTVI) and the YMCA have been designed to introduce high school students to the industry. The ICT skills development summer programme was created in partnership with BTVI, and this year some 300 students from New Providence and 100 from Grand Bahama will all be ICT-trained and certified. “As the programme continues, the human capacity will expand to 700-plus. These numbers indicate a strong ICT-trained Bahamian foundation for potential incoming tech companies,” Mr Thompson said. The YMCA ICT programme in Grand Bahama, also designed for high school students, provides training in python application, computer coding, robotics, computer technology as well as mathematics, physics and related skills. It is hoped that 70 students will graduate from the programme this year. Mr Thompson added: “The Bahamas’ approved national budget opened the window for free tertiary education for qualifying Bahamians at the University of The Bahamas and BTVI, respectively. Bahamians are encouraged to take full advantage of these opportunities because education is indeed a privilege that positions us all for upward mobility in whatever

MAKING A POINT – Grand Bahama Port Authority president, Ian Rolle, contributes to the GB technology committee meeting held recently in Nassau.

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STEERING COMMITTEE MEETING – The Grand Bahama technology hub committee held a meeting in Nassau recently. Senator Kwasi Thompson, minister of state for Grand Bahama, explained a number of initiatives to improve ICT capacity. undertaking we pursue. “Our small business owners have not been forgotten. We continually seek new tech entrepreneurs to expand their ideas. These ideas need to be pushed and developed.” Mr Thompson announced a new project due to start in September, in which 100 members of the public will be trained in various areas of technology. The Prime Minister’s Office will partner with Urban Renewal Grand Bahama and the Department of Social Services. Five Urban Renewal Centres will be

outfitted with ten computers each, and participants will receive training in the Internet, software development, website development and other ICT courses. This training will assist with new skills, retrain for different careers and also obtain professional certificates.

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PAGE 6, Monday, July 29, 2019 FROM PAGE ONE “Many businesses responded that the average cost of inventory, goods and services, wages and investments have increased during the last six months,” the Central Bank report on the survey said. It added that 68 percent of companies surveyed had seen an increase in total wages and operating costs, with 57 percent experiencing a rise in average inventory costs. Some 45 percent had endured increases in the prices of goods and surveys, with 50 percent reporting that the cost associated with making investments had also grown. The overall impression from the Central Bank’s findings was that the economy and trading conditions remain tough for most Bahamian companies, especially those in the domestic economy, although many have been able to hold the line on staffing and employee hours. “Just over half of respondents (57 percent) noted a decline in profits, while 24 percent noted an expansion,” the Central Bank revealed of its survey size.

THE TRIBUNE

Business optimism up but profits fall for 57% “Sixty-eight percent and 55 percent, respectively, of businesses reported that average weekly hours and the total number of employees remained relatively the same.” A further 71 percent of companies said debts owed to banks and other creditors remained unchanged, indicating that few have generated sufficient earnings to deleverage their balance sheets. Yet against this backdrop “businesses were largely optimistic about the upcoming six months”, according to the Central Bank, “although many expect prices will continue to rise” - something that will not be warmly greeted by consumers already grappling with the high cost of living. The survey found that 63

percent were optimistic of an improvement in overall business conditions during the 2019 second half, with 14 percent anticipating “no change” and a further 18 percent expecting the overall climate to “worsen”. A further 50 percent expect domestic private sector employment to increase during the final six months of 2019, with 30 percent anticipating staffing levels will be unchanged and the remaining 20 percent predicting unemployment will worsen. As for inflation, some 40 percent of businesses expect this to increase, with 35 percent predicting “no change” and the other 25 percent a reduction. This follows a 2019 first half in which 76 percent of companies interviewed endured inflation’s impact through

cost increases, with 10 percent saying there was no impact and the final 14 percent disclosing that prices decreased. When it came to the overall Bahamian business climate, 45 percent of respondents said there was “no change” and 32 percent said it had become “worse”. Just 23 percent saw an improvement, which stands in contrast to the seeming surge in business confidence for the 2019 second half. Finally, 41 percent of Bahamian companies experienced “no change” in domestic employment conditions during the 2019 first half, with 32 percent seeing an increase and 27 percent suffering a decrease. While cautioning that the survey was not representative of the entire business community due to

the “small sample size”, the Central Bank said a crosssection of companies and individuals “covering most of the sectors of importance” had been included. Mr Rolle, meanwhile, said efficiency rather than jobs was the most important measure of success for the domestic commercial banking industry, and suggested there was “considerable room” for improvement in the former. “We don’t want our domestic financial system to be measured just on the number of people working in the sector,” he explained. “We want to look at how efficient the sector is. There is considerable room to be more efficient.” The emphasis on efficiency, the Central Bank governor said, was necessary because of the

commercial banking industry’s importance as a source of savings intermediation and the hub around which monies move. As for the international financial services industry, Mr Rolle acknowledged that while there had been a reduction in the size of bank and trust company balance sheets as the sector adjusted to “tax transparency” and the new international regulatory environment, the Central Bank was more focused on how many institutions were transitioning to a physical presence in this nation. “Just to look at the balance sheet can give an inaccurate perception of what is happening,” Mr Rolle explained. He added that consolidation at the head office level, involving mergers and acquisitions, had also affected the number of bank and trust company licensees in The Bahamas.

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THE TRIBUNE

Monday, July 29, 2019, PAGE 7

Cut ‘terrifying’ bad loan rate by over 50% FROM PAGE ONE economic briefing. “People who have fallen behind for three months or more, the rate of delinquency is below nine percent. “That figure at one point was above 14 percent. We’ve done a good job in reducing it. But internationally, even if the delinquency rate’s at five percent, that’s a terrifying number. Yes, it’s been reducing, and we want to see a further reduction. “Thinking about a comfort zone we’d like to see, we’d need to be ultimately at a rate that’s less than half of what we’re experiencing” currently. Pressed further on this by Tribune Business, Mr Rolle added: “Four percent is even not complimentary by international standards. “That delinquency rate means something else has to pay for the money [tied up in non-performing loans], whether it’s fees, interest rates. There’s always a cost with the percentage of loans out there that are not working.” The total value of nonperforming Bahamian commercial bank loans peaked at just under $1bn in June 2014, but the Central Bank’s latest economic developments report reveals that figure has been cut by around 50 percent to $491.8m or 8.7 percent of outstanding credit. Total private sector arrears, which also includes bank loans between 30-90 days past due, fell by $28m or 3.9 percent in June alone to close the month at 12.2 percent of outstanding credit - a figure described by the Central Bank as “the lowest level recorded since November 2008” - almost 11 years ago. Mr Rolle, meanwhile, reiterated that the Central Bank was continuing to push its commercial bank licensees to “take more aggressive steps” to cleanup the remaining pile of non-performing credit clogging their balance sheets. This, he explained, would enable the banks to both increase lending to new, qualified Bahamian borrowers and fortify their ability withstand any future recessions. As a result, the Central Bank is prodding its licensees to accept higher losses on delinquent loans; take greater haircuts on the value of distressed properties; and making more aggressive efforts to sell-off such properties still on their books. At least one Bahamian commercial bank appears to be heeding the Central Bank’s call, with Scotiabank (Bahamas) recently advertising in the newspapers that it has sold another tranche of delinquent loans to Gateway Financial, the distressed debt acquirer, which is a joint venture between Sir Franklyn Wilson’s Royal Star Assurance and Sunshine Finance and the Mexican firm, Ascendancy. “Once that cloud is taken from the head of

institutions,” the Central Bank governor added of distressed credit, “we would expect the institution to have a better balance sheet to lend moving ahead, and more comfort. Part of the clean-up is making sure this is not hanging over the head of institutions and holding them back from lending.” Mr Rolle conceded that the foreclosure/repossession of homes subject to delinquent mortgages was “unpleasant”, but reiterated that the protection of bank depositors and their funds - which ultimately finances borrowers and their purchases - was “the priority” for both industry and regulator. “There are two sides to this: The borrower and the depositor,” he explained. “The system’s first obligation, when there are difficulties, is to make sure depositors do not lose their funds. We’re trying to avoid any outcome where depositors lose money. They’re the priority; to not leave question marks hanging over people’s money. It’s unpleasant but necessary to protect people’s money.” Still, Mr Rolle said Bahamian commercial banks - the largest source of credit in the country - were only expected to recover their appetite for further lending “at a gradual pace”. This was despite a $118.7m, or 14.6 percent, fall in total private sector loan arrears during the 2019 first half alone. This dropped total loan arrears from 14.6 percent to 12.2 percent as percentage of total outstanding bank credit. Short-term arrears, in particular, fell by $93.5m or 31.9 percent, while nonperforming loans more than 90 days past due dropped by $25.2m. Mortgage arrears, in particular, fell by $60.6m during the 2019 first half, while problem consumer and commercial loans contracted by $33.8m and $24.3m, respectively. Central Bank data, though, backs Mr Rolle’s assertion that this has yet to translate into any significant uptick in lending. “During the first six months of 2019, total Bahamian dollar domestic credit fell by $72.5m compared to a reduction of $33.8m during the comparable period of 2018,” it noted. This confirms that the amount of outstanding credit to the government, private sector and individuals continues to fall, meaning that new lending continues to be constrained. Net claims on the government fell by $41.6m, while credit to the public corporations contracted by $12.8m. Private sector credit again decreased by $18.5m, although the reduction was not as great as the $64.2m drop in the 2018 first half. While lending to businesses firmed by $26.7m compared to the prior year, 2019 first half credit for consumers and mortgages fell by $38.6m and $6.2m, respectively. The fact it has taken over

a decade to make significant inroads into the industry’s “bad loans” pile highlights the breadth and depth of the 2008-2009 recession, which caught both the sector and wider economy off-guard and ill-prepared to quickly adjust. Many Bahamian families and businesses already over-extended on credit fell into default as a result of job losses and/or reduced incomes, with many unable to get back on track even if their lender was able to restructure the debt. Besides the economy’s vulnerability to external shocks and over-borrowing, other causes of the nonperforming loan crisis were identified as over-aggressive lending by the banks themselves between 2002 and 2007 coupled with real estate appraisal valuations that, in some instances, proved wildly optimistic.

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PAGE 8, Monday, July 29, 2019

Governor: GDP growth too low for jobs to ‘gush’

FROM PAGE ONE

reduction long-term we need to aspire to higher growth rates. “We’re within a range where I would expect the unemployment rate to trickle lower, but if we want to see it gushing in terms of getting lower we need to focus on getting the growth rates up.... We need higher growth than the average projected for us to see unemployment move down at a faster rate.” Mr Rolle acknowledged that jobs were being created, but The Bahamas’ story in recent years has been that the economy is not growing fast enough to both absorb existing unemployment as well as the 3,000-5,000 high school leavers that enter the workforce annually every summer seeking work. The Central Bank governor added that The Bahamas needed to pay attention to the industries it was investing in, and

seeking investment for, to ensure that skills and other factors of production were up to the task when it came to delivering the quality services and products required for economic growth. The Bahamas’ national unemployment rate rose from 10.1 percent in November 2018 to 10.7 percent in May, and the International Monetary Fund (IMF) has already cast doubt on the country’s ability to hit the two to three percent GDP growth targets that Mr Rolle says it needs to target. It shaved 30 basis points off The Bahamas’ 2019 GDP growth forecast in its recent Article IV assessment, cutting this from the previous 2.1 percent to 1.8 percent. And, over the medium term, it is forecasting that annual Bahamian economic output will trend slightly lower at around 1.5 percent. The IMF’s growth revision is likely to have been prompted, at least in part, by the Department of Statistics’ release of The

THE TRIBUNE Bahamas’ annual GDP data in May, which found that real growth in 2018 had come in at 1.6 percent. Although those findings, which were released after the Fund’s April statement, represented the first substantial economic expansion for five years they were still well short of the 2.3 percent real growth that had been projected for 2018 by both the IMF and the government. Mr Rolle, meanwhile, said the tourism industry’s recent Baha Mar-fuelled growth was expected to moderate in 2020, although fears that the Cable Beach-based resort would “split” the high-end visitor market with its mega destination rival, Atlantis, had proven unfounded. With the hotel sector a more dominant factor than the vacation rental market in tourism’s growth, Mr Rolle said: “The industry absorbed the room capacity boost from Baha Mar, both increasing the average room occupancy rates and securing higher average daily room rates. “The 2020 outlook is for further growth in tourism, but at a slower pace, since hotel room inventories will

not increase by the same magnitudes as in the past 12 months.” The Central Bank governor added that The Bahamas remains wellplaced to add to its hotel room inventory, albeit not to the same extent as Baha Mar’s net extra 2,300 rooms, but warned that service quality must keep pace with any expansion. “The Bahamas still has capacity medium to longerterm to get gains from tourism,” Mr Rolle said. “What we’re experiencing is a big jump up in tourism because we have a lot more hotel rooms, and we’ve sold those. We’ve sold a greater percentage of the rooms we have in inventory, so occupancy rates are higher overall. “If we’re not adding more hotel rooms the medium to long-term growth mechanism is get your customers to spend more money in the country. The industry has some growth capacity, but manageable growth in capacity, as you have to maintain a certain quality standard. You have to train people to a certain standard. “If the pace of growth in rooms is faster than the

NOTICE

NOTICE is hereby given that CHRISTOPHER R. TOMLINSON of Lyford Cay, Nassau, Bahamas is applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 29th day of July, 2019 to the Minister responsible for Nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.

NOTICE is hereby given that GEOFFREY W. TOMLINSON of Bayroc Condos, West Bay Street, Nassau, Bahamas is applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/ naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 29th day of July, 2019 to the Minister responsible for Nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.

population, the people are able to deliver service, it will not work in terms of being sustainable. The Bahamas has to manage that but recognise there is scope to increase the returns from tourism by finding more activities in country for people to participate in.” Mr Rolle pointed to the focus on developing heritage and cultural tourism, as data from the Bahamas Hotel and Tourism Association (BHTA) and Ministry of Tourism again revealed “double digit” increases for May and the first five months of 2019. “Room revenue firmed by 26 percent, as the average daily room rate (ADR) rose by 6.6 percent year-on-year to $237.93 and the average occupancy rate increased by 9.1 percentage points to 72.6 percent, while the number of room nights sold advanced by 18 percent,” the Central Bank said of the resort industry’s May performance. “Similar developments were noted over the January to May period, with the number of room nights sold firming by 21 percent, contributing to the 11.3 percentage point strengthening in the average occupancy rate to 76.8 percent. In addition, amid a 9.9 percent expansion in the ADR to $288.08, total room revenue advanced by 33 percent.” As for vacation rentals, the Central Bank added: “The latest data from AirDNA showed that part of the improvement in stopover arrivals was attributed to the sustained growth

in the short-term rental market. “Total room nights sold increased by 33.4 percent in June over the same period of 2018, with bookings for both ‘hotel comparable’ and ‘entire place’ listings advancing during the month. Moreover, an analysis of the major markets revealed gains in bookings for the key markets of Exuma, New Providence, Abaco, and Grand Bahama of over 30 percent each. “In contrast, the ADR for both the ‘hotel comparable’ and ‘entire place’ segments contracted by 17.2 percent to $147.29 and by 7.9 percent to $402.32, respectively, as broad-based declines were reported across all major destinations, due in part to the addition of lower priced listings.” When asked whether this tourism growth was translating into real economic benefits for ordinary Bahamians and their families, amid suggestions that it was not being felt more broadly, Mr Rolle pointed to the number of “yellow plate” vehicles on the streets of New Providence. Pointing to the numerous vacation renters and visiting boaters buying supplies in Bahamian stores, he added: “We know individuals coming here are eating and moving around. If some of them are not seeing it, it’s not that people are not here and not spending money.” Mr Rolle reiterated that The Bahamas may have to look at developing new activities to ensure tourism spending was more widely distributed.

THE TRIBUNE

Caps, no interest paid on digital B$ FROM PAGE ONE

The digital currency restrictions are also laid out in the Central Bank’s just-released Financial Stability Report for 2018, which describes them as essential “safeguards” to protect the financial system. “While strictly adopting anti-money laundering/ counter terror financing and anti-proliferation safeguards, a retail Central Bank issued digital currency (CBDC) system will incorporate safeguards to preserve financial stability,” the report said. “One option would entail the creation of retail accounts, held with the Central Bank, which would be non-interest bearing and which would be capped in terms of the amount of funds that individuals could deposit into them. This would avoid the perception that the Central Bank intends to accumulate domestic resources, which ought to best be intermediated by the private sector. “Above these defined thresholds, digital wallets would have to be linked to transactional deposit accounts with commercials banks or other regulated deposittaking entities. Although commercial entities and the public sector would be able to act as the originating and terminating points for large volume currency payments, they would in all cases be required to house the material terminal flows in deposit taking institutions.” The Financial Stability Report added that the Central Bank is also proposing “circuit breaker mechanisms” to prevent any destabilising surge of funds between financial institutions stemming from the digital Bahamian dollar. “An identified financial stability concern relates to the fact that, in a crisis of confidence scenario, and without safeguards, CBDCs could expose banks to a rapid loss of deposits, which could lead to the failure of weak entities,” the Central Bank said. “The pilot phase of ‘Project Sand Dollar’ will allow for some controlled enhancement of the real time payments mechanisms and, where necessary, a scaling of parameters and limits which relate to transactions that apply for various categories of users. “In all outcomes, a CBDC would not be proposed as a deposit substitute, but as an enabler for expanded access to the existing regulated financial services.” Meanwhile, Mr Rolle said the Central Bank’s exchange control liberalisation initiative had generated significant interest. “We have seen a pick up in terms of the volume of interest in making investments in capital markets abroad,” he added. “We’ve seen increasing interest from trust companies that typically focus on international business. We’ve seen six of those come in over the last year to amend their licence to do business with Bahamians.

“It costs much less than $100,000 to have a general trust company licence, but when you apply for a licence to do business with the Bahamian market that’s $250,000 in terms of what the annual fee structure looks like. They’re planning for the medium term in terms of Bahamians having more foreign currency focus.” Mr Rolle, though, said there was unlikely to be “any explosion of interest” in international banks and trust companies doing business in the domestic economy as a result of the recent legal reforms that broke down the barriers between the two sectors to bring The Bahamas into compliance with the European Union’s (EU) demands. He suggested that the need to raise deposits and funding locally, as well as the relatively small size of the Bahamian market, were factors mitigating against efforts by the international financial services industry to “cross over”. The Central Bank governor also pledged to tackle long-standing complaints by Bahamian merchants about relatively high credit and debit card fees, suggesting that part of the solution lay in making “domestic infrastructure” more important when relaying payment information and moving funds. In the absence of its own SWITCH system, The Bahamas has to rely heavily on Visa and MasterCard to perform this role. “These are issues we are going to be tackling directly,” Mr Rolle said. “We have the National Payments Council, and we have started to look at bank fees... and at how to reduce those.” The card fees were flagged up by the International Monetary Fund’s (IMF) recent Article IV report, which urged local banks to stop “penalising” Bahamian merchants for accepting debit card payments by levying “unjustified” transaction fees. The fund, in its newlyreleased financial sector assessment on The Bahamas, said there was “no economic rationale” for the banks to apply the same processing fees for credit and debit card transactions given that the former’s costs are higher. It added that many Bahamian merchants were also unaware that they can negotiate these processing fees, known as the merchant discount rate (MDR), with the bank that maintains their business account. As a result, it said many companies were paying higher transaction fees than necessary on every debit and credit card payment they accept. The IMF warned that cardrelated fees were another potential obstacle to the Central Bank’s drive to shift the Bahamian payments system from its traditional reliance on cash to electronic transactions, and called for merchants to be “incentivised” into accepting digital commerce.

Monday, July 29, 2019, PAGE 9

PAGE 10, Monday, July 29, 2019

THE TRIBUNE

Woman set to replace Puerto Rico’s governor doesn’t want job

To advertise in The Tribune, contact 502-2394

SAN JUAN Associated Press

MARKET REPORT www.bisxbahamas.com

(242) 323-2330

FRIDAY, 26 JULY 2019

(242) 323-2320

ALL SHARE INDEX: CLOSE: 2,215.38 | CHG: 12.25 | %CHG: 0.56 | YTD: 105.93 | YTD%: 5.02 BISX LISTED & TRADED SECURITIES 52WK HI 4.50 20.91 7.00 5.60 2.60 2.00 3.00 11.75 6.17 4.64 12.50 2.74 2.40 10.00 7.01 15.60 9.00 3.75 14.00

52WK LOW 3.50 19.17 4.90 4.02 1.00 0.19 2.00 9.17 6.13 3.54 8.59 2.35 1.75 7.51 6.10 11.25 6.20 3.01 13.00

SECURITY AML Foods Limited APD Limited Bahamas Property Fund Bahamas Waste Bank of Bahamas Benchmark Cable Bahamas CIBC FirstCaribbean Bank Colina Holdings Commonwealth Bank Commonwealth Brewery Consolidated Water BDRs Doctor's Hospital Emera Incorporated Famguard Fidelity Bank Finco Focol J. S. Johnson

SYMBOL AML APD BPF BWL BOB BBL CAB CIB CHL CBL CBB CWCB DHS EMAB FAM FBB FIN FCL JSJ

1000.00 1000.00 1000.00 1000.00

Cable Bahamas Series 6 Cable Bahamas Series 8 Cable Bahamas Series 9 Cable Bahamas Series 10 Colina Holdings Class A Fidelity Bank Class A Focol Class B

CAB6 CAB8 CAB9 CAB10 CHLA FBBA FCLB

PREFERENCE SHARES

1.00 10.00 1.00

CORPORATE DEBT - (percentage pricing) 52WK HI 100.00

52WK LOW 100.00

115.92 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

104.79 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

SECURITY Fidelity Bank Note 22 (Series B) +

SYMBOL FBB22

Bahamas Note 6.95 (2029) BGS: 2015-1-3Y BGS: 2014-12-5Y BGS: 2015-1-5Y BGS: 2014-12-7Y BGS: 2015-1-7Y BGS: 2014-12-30Y BGS: 2015-1-30Y BGS: 2015-6-3Y BGS: 2015-6-5Y BGS: 2015-6-7Y BGS: 2015-6-30Y BGS: 2015-10-3Y BGS: 2015-10-5Y BGS: 2015-10-7Y

BAH29 BG0203 BG0105 BG0205 BG0107 BG0207 BG0130 BG0230 BG0303 BG0305 BG0307 BG0330 BG0403 BG0405 BG0407

BAHAMAS GOVERNMENT STOCK - (percentage pricing)

LAST CLOSE 4.19 17.43 6.00 5.39 2.49 1.95 2.18 11.75 6.16 4.44 9.02 2.82 2.36 10.05 7.00 15.45 8.25 3.37 14.00

CLOSE 4.19 17.43 6.00 5.39 2.49 1.95 2.18 11.75 6.16 4.44 9.02 2.86 2.36 10.05 7.00 15.45 9.00 3.37 14.00

CHANGE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.04 0.00 0.00 0.00 0.00 0.75 0.00 0.00

1000.00 1000.00 1000.00 1000.00 1.00 10.00 1.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00

LAST SALE 100.00

CLOSE 100.00

CHANGE 0.00

107.31 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

107.31 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

VOLUME

2,000

VOLUME

EPS$ 0.240 0.932 1.760 0.323 0.098 0.000 -0.438 0.708 0.480 0.184 0.627 0.102 0.467 0.000 0.611 0.743 0.939 0.203 0.631

DIV$ 0.160 1.260 0.000 0.250 0.000 0.020 0.000 0.720 0.220 0.120 0.000 0.068 0.060 0.328 0.240 0.540 0.200 0.120 0.600

P/E 17.5 18.7 N/M 16.7 N/M N/M -5.0 16.6 12.8 24.1 14.4 28.0 5.1 N/M 11.5 20.8 9.6 16.6 22.2

YIELD 3.82% 7.23% 0.00% 4.64% 0.00% 1.03% 0.00% 6.13% 3.57% 2.70% 0.00% 2.38% 2.54% 3.26% 3.43% 3.50% 2.22% 3.56% 4.29%

0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.00% 0.00% 0.00% 0.00% 6.25% 7.00% 6.50%

INTEREST Prime + 1.75%

MATURITY 19-Oct-2022

6.95% 4.00% 4.25% 4.25% 4.50% 4.50% 6.25% 6.25% 4.00% 4.25% 4.50% 6.25% 3.50% 3.88% 4.25%

20-Nov-2029 30-Jul-2018 16-Dec-2019 30-Jul-2020 15-Dec-2021 30-Jul-2022 15-Dec-2044 30-Jul-2045 26-Jun-2018 26-Jun-2020 26-Jun-2022 26-Jun-2045 15-Oct-2018 15-Oct-2020 15-Oct-2022

MUTUAL FUNDS 52WK HI 2.25 4.29 2.06 191.61 158.55 1.62 1.76 1.70 1.15 7.72 8.97 6.77 11.25 12.14 10.63 10.00 8.69 11.79

52WK LOW 1.67 3.04 1.68 164.74 116.70 1.56 1.68 1.64 1.08 6.41 7.62 5.66 8.65 10.54 9.57 9.88 8.45 11.20

FUND CFAL Bond Fund CFAL Balanced Fund CFAL Money Market Fund CFAL Global Bond Fund CFAL Global Equity Fund FG Financial Preferred Income Fund FG Financial Growth Fund FG Financial Diversified Fund FG Financial Global USD Bond Fund Royal Fidelity Bahamas Opportunities Fund - Secured Balanced Fund Royal Fidelity Bahamas Opportunities Fund - Targeted Equity Fund Royal Fidelity Bahamas Opportunities Fund - Prime Income Fund Royal Fidelity Int'l Fund - Equities Sub Fund Royal Fidelity Int'l Fund - High Yield Fund Royal Fidelity Int'l Fund - Alternative Strategies Fund Colonial Bahamas Fund Class D Colonial Bahamas Fund Class E Colonial Bahamas Fund Class F

NAV 2.25 4.29 2.06 191.61 158.33 1.62 1.76 1.70 1.15 7.72 8.97 6.77 11.25 12.14 10.57 9.92 8.68 11.38

YTD%12 1.86% 1.25% 1.35% 3.85% 7.12% 1.57% 0.99% 1.32% 3.22% 3.25% 3.82% 2.59% 8.44% 3.87% 1.84% -0.71% 7.40% 10.20%

MTH% 3.97% 4.23% 2.73% 6.28% 2.08% 4.58% 4.25% 4.12% 5.64% 6.65% 8.36% 4.81% 0.78% 4.17% 2.29% 0.16% 2.70% 1.30%

MARKET TERMS BISX ALL SHARE INDEX - 19 Dec 02 = 1,000.00 52wk-Hi - Highest closing price in last 52 weeks 52wk-Low - Lowest closing price in last 52 weeks Previous Close - Previous day's weighted price for daily volume Today's Close - Current day's weighted price for daily volume Change - Change in closing price from day to day Daily Vol. - Number of total shares traded today DIV $ - Dividends per share paid in the last 12 months P/E - Closing price divided by the last 12 month earnings

YIELD - last 12 month dividends divided by closing price Bid $ - Buying price of Colina and Fidelity Ask $ - Selling price of Colina and fidelity Last Price - Last traded over-the-counter price Weekly Vol. - Trading volume of the prior week EPS $ - A company's reported earnings per share for the last 12 mths NAV - Net Asset Value N/M - Not Meaningful

NAV Date 30-Jun-2019 30-Jun-2019 28-Jun-2019 30-Jun-2019 30-Jun-2019 30-Apr-2019 30-Apr-2019 30-Apr-2019 30-Apr-2019 30-Jun-2019 30-Jun-2019 30-Jun-2019 30-Jun-2019 30-Jun-2019 30-Jun-2019 30-Mar-2019 30-Mar-2019 30-Mar-2019

THE woman who is supposed to replace Puerto Rico’s embattled governor announced yesterday that she doesn’t want the job as the US territory reels from political crisis. Justice Secretary Wanda Vázquez, pictured, said in a Twitter post that she hopes Gov Ricardo Rosselló will appoint a secretary of state before resigning Aug 2 as planned. Former Secretary of State Luis Rivera Marín would have been next in line as governor, according to the US territory’s constitution. But he is one of more than a dozen officials who have resigned in recent weeks since someone leaked an obscenity-laced chat in which Rosselló and close advisers insulted people including women and victims of Hurricane Maria. Rosselló on Wednesday announced that he would step down following nearly two weeks of massive protests amid anger over the chat, corruption charges against several former government officials and a 13-year recession. In the chat, the 40-year-old Democrat and son of a governor called a female politician a “whore”, referred to another as a “daughter of a bitch”, and made fun of an obese man with whom he posed in a photo. Rosselló became the first governor to resign in the modern history of Puerto Rico, a US territory of 3.2 million American citizens. He is more than halfway through his four-year term. Marín’s resignation had left Vázquez as next in line to be governor. But she said she has already told Rosselló about her wishes not to get the job, creating a chaotic scenario about who will be Puerto Rico’s next leader. If Rosselló’s choice for a secretary of state is not approved by the island’s House and Senate, Puerto Rico’s law dictates the treasury secretary would be next in line if the justice secretary doesn’t become governor. But current Treasury Secretary Francisco Parés is too young at 31 years old. The

constitution dictates the person would have to be at least 35, so that would leave interim Education Secretary Eligio Hernández next in line. He replaced former education secretary Julia Keleher, who resigned in April and was arrested July 10 on federal corruption charges. She has pleaded not guilty. “This is crazy,” political expert Mario Negrón Portillo said in a phone interview yesterday. “We have no idea what’s even going to happen tomorrow. Societies cannot live with this type of uncertainty.” Vázquez’s comments came less than an hour after Public Affairs Secretary Anthony Maceira resigned. “There were many challenges that we had to face together as Puerto Ricans, although sometimes we differed,” he said. “The work of each one of us must continue with the welfare of our island and its people as its north.” The announcement comes a day before Puerto Ricans planned another march, this time against Vázquez, who is accused of not ordering an investigation into the alleged mismanagement of supplies for hurricane victims, among other things. Vázquez said on Friday that there is a lot of misinformation but that she cannot speak publicly about certain cases. “The vicious attacks on my personal and professional integrity continue,” she said. “The desire and agenda of some to try to undermine my credibility at this moment of transcendental importance to Puerto Rico and to destabilize the governmental order is evident.” A spokeswoman for Vázquez did not immediately return a message for comment yesterday. Aimara Pérez, a 32-yearold drafter who participated in some of the most recent marches, said she did not want Vázquez as governor. “We’re going to keep protesting,” she said. “It’s not going to stop. If there is evidence of corruption, the people are going to push ahead without fear, and we’re going to get rid of them all.”