Prime Minister, Dr. the Hon. Hubert A. Minnis’ plans for the liberalization of the administration of the country’s exchange control regime is expected to promote greater opportunities for Bahamian investors and small and medium-sized businesses/enterprises (SMEs). The Prime Minister announced (Wednesday, December 20, 217) that Bahamians and residents will be given the approval to repatriate foreign currency deposits or investment assets currently held outside of The Bahamas, or repatriate the out-of-country facilities to The Bahamas, at the same foreign currency value upon application to the Central Bank of The Bahamas. No penalties will be imposed on regularized accounts and investments.
Prime Minister Minnis said the owners of deposit facilities will be allowed to use those resources to finance domestic transactions without restriction. (Prohibitions, Prime Minister Minnis said, will exist against either funding or augmenting these facilities with proceeds converted from Bahamian dollars.) This reform accommodates Bahamian residents who have amassed deposits or investment assets abroad for which they should have obtained prior Exchange Control approval.
Administration officials say what this means is that, by example, Bahamian small and medium-sized businesses and Bahamian investors who currently have U.S. Dollar accounts, will be able to maintain those U.S. Dollar accounts in The Bahamas. The same goes for accounts held in other jurisdictions. Prime Minister Minnis also announced that the buying and selling rates for the Investment Currency Market (ICM) will be “significantly reduced” from 12.5 percent and 10 percent respectively, to 5 percent and 2.5 percent. The Prime Minister further said Bahamians will be able to fund investments at the lower rate of B$1.050 (US$1.00) and to repatriate investment currency proceeds to The Bahamas at the rate of B$1.025 (US$1.00). The two above-mentioned reforms are designed to reduce the costs of funding for capital market and related investments made outside of The Bahamas, with investment currency that is available at a premium.
The Prime Minister said as part of the relaxation protocol, Bahamian-owned businesses will be allowed to maintain operating deposit accounts of up to $100,000 in foreign currency at domestic, commercial banks, without prior reference to the Central Bank. These accounts will have to be exclusively funded from revenues earned in foreign currency. This reform provides access to foreign currency accounts for local businesses to cover international expenses in their operations. Central Bank approval will continue to be required for accounts with balances of more than $100,000 in foreign currency. The Minnis Administration will also relax Exchange Controls on capital transactions, namely on capital (investment) and current account (trade) transactions for small and medium-sized Bahamian businesses/enterprises (SMEs).
Central Bank officials also propose to delegate the operation of the ICM to Commercial Banks at a date to be arranged in 2018.
The changes, which will come into effect as of February 1, 2018, are expected to not only assist domestic, small, and medium-sized Bahamian businesses and Bahamian investors by improving the ease of doing business for Bahamians and residents, but can also be considered part of the Minnis Administration’s new economic strategy to attract investments from the global Bahamian Diaspora in order to help create a global network of Bahamians and to help boost national development, on the road to creating a 21st Century Bahamas. They follow the Prime Minister’s recent announcements in Washington, D.C., U.S.A. where Dr. Minnis addressed members of the Bahamian Diaspora residing in the Washington D.C., Maryland, and Virginia areas, that his Administration has embarked upon a programme of reform and transformation that includes innovative thinking about the role of government in order to create new and innovative partnerships for national development.
Prime Minister Minnis encouraged the gathering to not only consider the new investment opportunities that will become available in The Bahamas as a result of his Administration’s new economic strategy, but to also “consider lending your talents and resources in areas such as youth development, volunteerism and community service.” “The global Bahamian Diaspora is a major talent and investment pool the country must tap into. Like other countries that have successfully done so, my Government will cultivate and utilize the energy of the Bahamian Diaspora,” Prime Minister Minnis added. Prime Minister Minnis said the reforms were “long overdue” and comprise part of his Administration’s commitment to assisting small and medium-sized Bahamian businesses/enterprises, which the Prime Minister said, are a “critical part” of the Bahamian economic structure, employing thousands of Bahamians.
“It is a modernization reform that Bahamian businesspersons have been asking for, for a long time,” Prime Minister Minnis said during a press conference held to announce the liberalization of Exchange Control. “The Government is committed to targeted, ambitious and sustainable liberalization of the capital account. I note that the Government will continue to review further, gradual adjustments in the Exchange Control Regime,” Prime Minister Minnis said.