In the Concluding Statement for its recent official visit, The International Monetary Fund (IMF) has revised its economic growth projection for the Bahamian economy to 2.3%, an improvement over its previous forecast. The Statement, which was published Monday, gives the preliminary findings on the country’s macro-economic outlook and fiscal environment.
Minister of Economic Affairs Hon. Michael Halkitis noted that the new estimate represented a remarkable revision.
“Previously they were estimating 1.8 %. Now they are estimating that the economy will grow in 2024 by 2.3%. That’s an increase of 0.5%. To go from 1.8 to 2.3 % they are raising their projected growth rate by 28%. That’s a massive revision,” he stated.
Minister Halkitis explained that the projection reflects that the economy of The Bahamas continues to grow and inflation is down. He emphasized that the government’s fiscal strategy has surpassed many expectations, performing well on fiscal goals such as cutting the debt-to-GDP ratio, which exceeded 100% 2 years ago and has now been reduced to 84%.
“We have met or beat every single deficit projection that we have given over the last two years so we are very, very confident that our projections for 2024 will be realized,“ said Minister Halkitis.
Regarding IMF estimates for the 2022/2023 deficit, Min. Halkitis noted that the IMF has consistently underestimated revenue performance.
“What you see is an opinion of the IMF that our revenue will not come in as well as we estimate that it will. We have a difference of opinion. Remember that since 2021, we have had the IMF and the rating agencies consistently underestimating how our revenue can perform. Our experience has shown that our revenue along with the growth in the economy has performed very well. We believe that will continue,” Minister Halkitis reaffirmed.
During the fiscal period 2022/2023, the actual deficit came in $42 million below projections.
The reduction of inflation, from 7.1% in July 2022 to 2.2% in July 2023, has also complemented the Davis Administration’s broad revenue improvement strategy to grow the economy, improve revenue administration, and control spending. The Government has also prioritized outstanding tax collection, particularly real property tax on foreign-owned properties.