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WEDNESDAY, AUGUST 4, 2021
$5.10 Restrictions gave external reserves ‘$200m cushion’ By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Central Bank’s governor yesterday revealed that restrictions imposed last year in the immediate aftermath of the COVID19 pandemic’s outbreak had “provided at least a $200m cushion for the external reserves”. John Rolle, speaking at a 2021 second quarter and half-year economic briefing, disclosed that the final remaining measures - the prohibitions on broker/dealers, individual Bahamians and residents investing in overseas securities and real estate via the Investment Currency Market (ICM) - will almost certainly be removed before 2021 year-end. “Taking account of the improved foreign exchange market conditions, the Central Bank has already removed the majority of the conservation measures that were introduced in 2020,” he said. “The remaining measures relate to capital market investments, principally through the local broker/dealers or securities market firms, and the investment currency market. These restrictions are under review for timing that would see them removed before the end of 2021.” The Central Bank chief, responding to a later Tribune Business question, said that and other measures which included restrictions on dividend payments by the Canadian-owned banks and the National Insurance Board’s (NIB) repatriation of its foreign currency investments, had “conservatively” produced a $200m buffer to maintain the external reserves at acceptable levels until the government’s overseas financing activities kicked-in. Holding sufficient foreign reserves is vital to maintaining the Bahamian dollar’s one:one peg to its US counterpart, and Mr Rolle said: “I believe, looking from the start of the pandemic to the point at which we saw the government’s financing activity start, we estimate there’s at least $200m-plus of cushion that we provided to the foreign reserves over that period. “The banking sector measures added close to $100m in cushion. In ordinary year, and given the trends, you’re looking at close to $100m in transactions that happen by way of investment by residents abroad. We’d have received some conversion from NIB that was substantial. That added to the reserves. “When you look at these and some of the other measures, the $200m-plus is a conservative projection in terms of the cushion provided. But understand that these were sort of one-offs that might have created a little bit of space time wise. “Once you exhaust that protection, what is more important is that the start of spending on the Government side has to appropriately matched by foreign currency financing as you were stimulating continued calls for spending that had to be taken into account.” Elsewhere, Mr Rolle said just 2.3 percent of all outstanding loans to businesses and households remain in COVID-19 related deferral programmes compared to around one-third of all credit facilities at this time last year when pandemicrelated uncertainty was at its peak. However, non-performing loans have increased to 9.5 percent of all
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Bahamas ‘not doing enough’ to fight corruption perception
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
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OVERNANCE reformers yesterday warned The Bahamas “is not doing enough to change perceptions of corruption” as the US government again cited irregularities in this nation’s procurement and investment approvals process. Matt Aubry, the Organisation for Responsible Governance’s (ORG) executive director, told Tribune Business it was “not good enough” for The Bahamas to believe its “status quo” ranking as less corrupt than many Caribbean competitors was sufficient at a time when “we cannot leave anything on the table economically” due to COVID-19’s devastating fall-out. He spoke out after the US State Department released its annual investment climate statement on The Bahamas and all other nations. While the narrative and findings were little
MATT AUBRY different or changed from previous reports, and no specific or named incidents of corruption were cited, it could also be argued that this nation is making little headway in addressing concerns regarding the level and presence of government graft. “The government has laws to combat corruption among public officials, but they have been inconsistently applied,” the US
DOCTORS Hospital has seen a 75 percent year-overyear increase in demand for its services based on topline revenue growth during the first six months of its 2022 financial year, a senior executive has revealed. Dennis Deveaux, the BISX-listed healthcare provider’s chief financial officer, told Tribune Business that this increase - driven by a combination of COVID and non-COVID related care - gave an indication of “what is possible” in terms of full-year profits while emphasising: “We want the pandemic to go away.” He added that revenues through Doctors Hospital’s second quarter, which closed on Saturday, had risen yearover-year by 25 percent even when income earned from providing COVID19 treatments was stripped out. Mr Deveaux said this
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• But says: ‘We want COVID to go away’ • Pandemic care, testing one-third of income • Access boost via 50% patient deposit slash
DOCTORS HOSPITAL was a sign that demand for the provider’s non-COVID services had returned and has now reached above prepandemic levels. Revealing that COVID19 care and testing presently accounts for about onethird of Doctors Hospital’s
top-line income, he told this newspaper: “Because of the initiatives we put in place to grow organically, we’ve seen demand for existing services above pre-COVID levels. Our core non-COVID stuff has come back and is actually higher than
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
pre-COVID levels... “I think our revenues, if you were to pull out COVID-19 for the first quarter of the current year through to the second quarter, they will have grown by 25 percent and that’s pulling out COVID-19.” The Doctors Hospital chief, though, warned that the “true measure” of its financial resiliency amid the pandemic will be year-over-year comparisons with second quarter results from 2020. That is because the 2020 first quarter, which covers the period from the beginning of February to end-April, contained a five-week period on the back-end when the BISXlisted healthcare provider
Senators under the Public Disclosures Act, the report added that the process also lacked transparency because no summary of these declarations was made public. “The campaign finance system remains largely unregulated, with few safeguards against quid pro quo donations, creating a vulnerability to corruption and foreign influence. The procurement process also remains susceptible to corruption, as it contains no requirement to engage in open public tenders, although the government routinely did so,” it said, noting that the Public Procurement Act is due to be implemented in early September. “According to Transparency International’s 2020
Doctors sees 75% growth in demand
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
‘Near-term risk’ to the economy has increased THE Central Bank’s governor yesterday warned that “very near-term risks to the economy have increased” as a result of surging COVID19 infection rates in The Bahamas and its key tourism source markets. John Rolle, addressing a 2021 second quarter and half-year economic briefing, said it was important to ensure pandemic-related risks are “reasonably contained if we are to preserve the pace of recovery” in the tourism industry both nationally and worldwide. “It must be emphasised that in the very near-term, risks to the economy have increased, even if in the months further out they continue to subside,” he warned. “It is our capacity to maintain control over the COVID-19 risks, that will help to define the economy’s near-term trajectory; that is, around sustainability of foreign exchange market conditions, arresting further deterioration in public finances, and keeping financial stability risks in check.” The Central Bank chief said some of what is required is “completely outside the control of The Bahamas”, and depends on the actions taken by its key source tourism markets. “But the rest of that relates to how we manage the level and spread of contagion inside the country. The Bahamas still has some of the COVID-19 risks it has to manage internally. Another 35 new COVID19 infections were recorded on Monday, taking the total number of active cases to more than 2,000 Bahamaswide. Some 104 persons remain in hospital with the virus, and 14 are in the intensive care unit (ICU). Mr Rolle, meanwhile, said the two percent economic growth projected for The Bahamas was “not at a very high or optimistic projection. It’s not something that’s out of the realm of achievable”. However, he added that this nation could not lose sight of the fact it had seen real GDP (gross domestic product) slashed by at least 16 percent in 2020, and that the road to recovering this lost ground will take several years yet.
• US again cites deficiencies, irregularities • Anti-corruption Bills seen as ‘too intrusive’ • ORG chief: ‘Status quo’ is not acceptable Investment Climate report on The Bahamas said. “The law provides criminal penalties for corruption by public officials, and the government generally implemented the law effectively. “However, there was limited enforcement of conflicts of interest related to government contracts and isolated reports of officials engaged in corrupt practices, including by accepting small-scale ‘bribes of convenience’. The political system is plagued by reports of corruption, including allegations of widespread patronage, the routine directing of contracts to political supporters, and favourable treatment for wealthy or politically connected individuals.” Noting that there was no “independent verification” of the asset/wealth declarations submitted by MPs and
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Governor: Use $200m for Dorian rebuilding By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
THE Central Bank’s governor yesterday urged Dorian-ravaged businesses and homeowners to draw down on “at least $200m” in unused reinsurance funds to finance rebuilding, adding: “The economy will be better off.” John Rolle, speaking at the regulator’s 2021 second quarter economic briefing, said it had “no intent or desire” for these monies to remain in The Bahamas’ external reserves even though they had helped to boost the country’s foreign currency holdings to $2.6bn at mid-July. Revealing that Dorianrelated insurance claims collectively generated around $500m in foreign currency-related reinsurance inflows into The Bahamas, Mr Rolle said: “In particular, there remains important accumulations in the reserves from reinsurance receipts from Hurricane Dorian. The economy would benefit more from having those resources spent at a faster
• ‘Economy better off’ than if sitting in reserves • Banks: $100m ‘turnaround’ on currency dealings • Foreign exchange purchases increase by 10%
JOHN ROLLE pace on rebuilding.... “There’s no intent or desire for those funds to sit unused. We’d like to see the economy benefit from a faster pace of rebuilding, which means those reserves get used up. To the extent there are still considerable amounts of funds intended for or expected to be put into the repair of damaged properties in The Bahamas, we’re better off seeing those funds used up in rebuilding and not seeing them in the reserves but payments for goods and services that continue to rebuild.”
Estimating just how much reinsurance money remains in The Bahamas’ external reserves, Mr Rolle added: “After the hurricane, it’s estimated that the reinsurance receipts were well in excess of half-a-billion dollars ($500m). Today, from what we’ve seen, we estimate there’s at least $200m in funds that we have in The Bahamas that have not been used. We’d be better off seeing those funds spent on rebuilding.” Still, the improvement in foreign currency inflows enjoyed over the 2021 first half as tourism rebounded and the wider economy opened meant Bahamian commercial banks had seen “a complete turnaround” in their currency exchange dealings compared to the same period last year which was hit by COVID-related lockdowns and restrictions. Mr Rolle said this had resulted in “a differential in excess of $100m”
compared to the 2020 first half, as “on a net basis” the commercial banks purchased more foreign currency from clients than they sold to them. This, the governor added, was a sign that the private sector is now “making a net contribution” to the external reserves build-up via revived foreign currency inflows related to tourism. “As income is returned we’re seeing the spending pick up,” Mr Rolle added. “That’s why we see more foreign exchange being purchased from the banks to make payments abroad. What we did see during the first half of the year is a complete turnaround of the situation with the commercial banks, meaning that on a net basis they actually took on more foreign exchange from customers than they sold to customers. “That’s an indication of businesses selling more foreign currency to the banks
on a net basis. This year the banks purchased foreign currency from the public. Last year, between January and June, it was a small net sale of foreign exchange to customers as opposed to an intake. “The differential from this year compared to last year is in excess of $100m. That is an indication of the extent to which the situation for banks has been reversed relative to the intake from customers.” The Central Bank chief added that net foreign exchange inflows from the government over the 2021 first half were “not drastically different” when compared to the same period in 2020, and he said: “The additional difference this year in terms of the outcome; the private sector is now making a net contribution to the accumulation of reserves.” Mr Rolle said tourism’s “seasonality”, with the industry’s quietest periods traditionally stretching from September through October, meant that foreign currency outflows usually
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