(CU)_The COVID-19 pandemic has represented a major shock in The Bahamas, where an increasing unemployment rate, together with an overall worsening of economic conditions saw the country’s real GDP falling by 14.5 per cent last year. Although regulators and commercial banks expanded their financial support measures in order to minimise the effects of border closures and lockdowns, the Caribbean nation reported a negative return on investments in 2020.
According to the Quarterly Bulletin of the Inter-American Development Bank (IDB), while financial systems being “well capitalised” to respond to the global health crisis, this was proven to be insufficient. The report said: “Forbearance, moral suasion, and financial support measures might have prevented non-performing loans from increasing more during the pandemic. [However,] Profitability, in terms of the return on assets and the return on equity, declined in most cases, and even turned negative in The Bahamas.”
The Washington-based development bank further noted that despite loan moratoria that were put in place to provide relief to those who were affected by the COVID-19 shock, the proportion of non-performing loans and the ratio of arrears keeps growing, reaching 8.7 percent and 5.5 percent of total loans to the private sector, respectively, in the first quarter of this year. The authors of the report also project that by 2026, The Bahamas’ public debt could reach double digit increases, as they warned that fiscal consolidation efforts remain “uncertain”.
The IDB also emphasised the fact that the on-going fourth Coronavirus wave, which is producing more infections and deaths, is increasing the pressure on health services. “Lockdown measures have been put in place on an island- by-island basis, as specific family islands saw a significant rise in COVID -19 cases during the fourth wave,” the report read.
Therefore, the bank added that as a result of all of this, the economy of the Caribbean nation is “still struggling”.
