The Caribbean Development Bank (CDB) has provided US$100 million in assistance to The Bahamas as it seeks economic recovery and resilience in the aftermath of hurricane Dorian and the COVID-19 pandemic.
The bank’s board of directors approved the first of a proposed two-part series of policy-based loans (PBLs), with a second tranche of US$25 million likely to be appraised in the fiscal year 2023/24.
The PBL will assist the Bahamas government as it implements a program of policy, legislative, and institutional changes targeted at strengthening fiscal discipline and increasing revenue mobilization while protecting the disadvantaged.
The CDB’s head of economics, Ian Durant, indicated that the support program will help the Bahamian economy recover from the terrible effects of Hurricane Dorian in 2019 and the COVID-19 epidemic in 2020.
“While The Bahamas was recovering from the effects of Dorian, the pandemic caused an additional shock to The Bahamas’ tourism-dependent economy.” These shocks precipitated an unparalleled catastrophe that wreaked havoc on the Bahamas’ economy and people. “Central Government (CG) debt increased sharply, and policy momentum aimed at fiscal consolidation and unlocking higher medium-term growth was disrupted,” Durant noted.
Despite this, he stated that the government has been “making credible efforts towards restoring fiscal sustainability by implementing measures to increase revenue and reduce expenditure to bring its fiscal responsibility framework back on track,” and that CDB was lending its support in this regard.
The CDB makes policy-based loans to governments in response to pressing demands caused by external or domestic economic imbalances, such as debt crises and temporary foreign reserve shortages.