The Bahamas Government entered into a contractual arrangement with the Inter-American Development Bank (IDB) for investment projects totaling $70 million. During the signing ceremony between the Government and the IDB at the Ministry of Finance, Thursday, June 14, 2018, Deputy Prime Minister and Minister of Finance the Hon. K. Peter Turnquest said during the mid-term budget review, he presented in Parliament a Resolution seeking authorization for the Bahamas Government to enter into the contractual arrangements with the IDB. The DPM said, “Today’s event, I note, marks the end of numerous discussions, among key stakeholders, whose contributions were vital in designing the activities or components of each project. “Moreover, this event confirms the government’s commitment to channel investment towards Family Island communities, as, over the next five to six years, the country will witness the construction or rehabilitation to several Family Island airports and runways.”
He said these assets are regarded as vital points of connection to the wider Bahamas and the entire world, and therefore, planned upgrades are critical to enhancing the economic prospects of the islands. DPM Turnquest said, in addition to upgrading airport infrastructure, civil works will also be undertaken on selected islands, to fortify traditionally and re-introduce natural sea defense, so as to mitigate the negative impact of natural disasters to coastal areas. “This work is important for the environmental sustainability of The Bahamas.” He explained that the $70 million for investment projects with the IDB is expected to address activities for the following areas:-
- Climate Resilient Coastal Management and Infrastructure $35 million
- Family Island Airport Infrastructure Programme $35 million
The DPM said the IDB is a development institution and as a result, member countries accessing funds from the Ordinary Capital window of the institution are not subject to commercial financial terms. “Hence, the tenor on these loans is 25 years at a variable interest rate, which is inclusive of LIBOR and currently stands at 3.25 percent. “While this is the interest rate of choice, the Ministry of Finance, in consideration of future market conditions, has the option of converting to a fixed interest rate, if necessary.”
He said comparatively, these terms are more favorable than accessing funds from the international private sector markets, where the interest rates are recorded at 5.84 percent with a 10-year tenor. “These projects, I note, target infrastructure development and invariably are expected to have a positive impact on the productive sector. The DPM said while 80 percent of the total loan resources or in absolute terms, $56,500,000 are allotted to civil works, some of the focal activities expected to be addressed in the projects and the corresponding financial resource include:
Ø Infrastructure improvement to Airports and Runways on the islands of Exuma, Eleuthera, and Abaco –$33,000,000
Ø Sustainable Coastal Protection Infrastructure to the Islands of Grand Bahama, New Providence, Long Island, and Andros – $23,500,000.
DPM Turnquest also explained that there is a link between the projects and focal sectors of the economy. “Tourism and the Environment – both I emphasize, require constant support from the government. Our airports, I reiterate, are the main gateways for local and international transport between the islands. “As for the Environment, this sector is regarded as an important asset, for which protective measures must be undertaken to prevent degradation. Unquestionably, failure to implement protective environmental measures would engender a negative impact on our tourism product and economic viability.” He noted the importance of all stakeholders in providing fruitful input for the successful completion of each initiative; and also that the current economic environment, dictates the application of financial prudence in managing the resources allocated to the projects. “In this instance, there must be constant monitoring and evaluation of actions deemed necessary to achieve outputs and outcomes for each project.”
The DPM said in addition to the investment programmes, the IDB will provide a grant totaling $500,000 to facilitate the government’s efforts to diversify the economy. He said, “Through this grant, we will undertake diagnostic studies in three areas that have the potential of creating innovative industries in the country: these being, the digital economy, blue economy, and boutique agriculture.” In attendance at the signing ceremony were Minister of Tourism and Aviation the Hon. Dionisio D’Aguilar; Minister of Public Works the Hon. Desmond Bannister and Minister of the Environment and Housing the Hon. Romauld Ferreira. Representing the Bank were Alexandre Meira de Rosa, IDB Vice-President of Countries and Florencia Attademo-Hirt, IDB Country Representative.