Presentation to BICA

Bahamian Economic Growth

Charles W. Littrell

Inspector of Banks and Trust Companies

Central Bank of The Bahamas

12 March 2018

Bahamian Economic Growth

Three Themes

•Economic Imbalances & Risks

•Central Bank Initiatives

•What can the Average Bahamian Do?

2

Bahamian Economic Growth

Bahamian Economic Imbalances

• Sluggish Economic Growth

• Balance of Trade

• Narrow Industry Base

• Public Sector Deficit

• Unhelpful Borrowing & Consumption

Sluggish Growth

4

Bahamian Economic Growth

2010

2016

Income per capita $21,770 $21,640

Electricity Sold 1.88 GWH 1.96 GWH

Bank loans to private

sector

$6.6 bn $6.2 bn

Why Are We Growing Slowly?

• Good News on Tourists, Oil Prices

• Bad News:

- Post – 2008 hangover

- Increased Debt

- Financial Services Drifting Down

- Weather

- Low Investment

5

Bahamian Economic Growth

Bahamian Economic Growth

Reasons For Hope

• Better Tourism Income

• Improved Government Efficiency

• Financial Services

• Energy (and other) Reforms

• Reduced Criminality & Corruption

Obvious Risks

•U. S. or Global Recession

•Oil Prices

•Debt

•Climate Change

•Suppression of Financial Services

7

Bahamian Economic Growth

Bahamian Merchandise Trade

8

Bahamian Economic Growth

2010

2016

Exports $461 million $357 million

Imports $2.2 billion $2.5 billion

Trade Balance ($1.7 billion) ($2.2 billion)

Please Be Nice To The Tourists

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Bahamian Economic Growth

2010

Stopover

2010

Cruise

2016

Stopover

2016

Cruise

Number of

tourists

1.4

million 3.8 million 1.5 million 4.7 million

Expenditure $1.9

billion

$0.3

billion

$2.3

billion $0.3 billion

Expenditure/

Tourist $1,360 $78 $1,561 $64

Government Fiscal Summary

Bahamian Economic Growth

Government

Accounts 2010 2017

Revenue $1.3 billion $2.1 billion

Expenditure $1.6 billion $2.7 billion

Balance ($0.3 billion) ($0.6 billion)

Debt (direct

charge) $3.7 billion $7.2 billion

Bahamian Households

Bahamian Economic Growth

2010

2017

Bank deposits $3.4 billion $3.3 billion

Total Personal

Credit

$5.1 billion $5.1 billion

Consumer

Installment Credit

$2.1 billion $2.3 billion

Past due $178 million $153 million

Number past due 23,600 8,600

Average past due

balance

$7,600 $17,800

What Is The Central Bank Doing?

• Reducing Problem Debts

• AML/CFT

• Simplification

• Payments

Bahamian Economic Growth

13

Domestic Non-Accruals

Bahamian Economic Growth

0 2 4 6 8 10 12 14 16 18

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

6.1

9.4

12.2

13

13.9

15.7

16.2

15.1

12.3

9.9

NPLs/Total Loans (%)

Bahamian Economic Growth

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Provision Coverage

0 10 20 30 40 50 60 70 80

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

46

37

37

37

43

39

51

59

71

75

Total Provisions/NPLs (%)

Bahamian Economic Growth

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Pushing Down NPLs

• Portfolio Sales

• Respect Due Process

• Steady Progress

• Foreclose When Necessary

Bahamian Economic Growth

16

Financial Crime Risk

Management

• We are mainly an AML Risk

• Need to monitor terrorism,

Proliferation

• Steadily increasing global standards

Bahamian Economic Growth

17

AML/CFT Initiatives

• Continuous Supervision

• Legislation/Regulation Reform

• More Industry Guidance

• More Outreach

National AML/CFT Conference

September 17 & 18, 2018

Bahamian Economic Growth

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Simple Policies & Procedures

• Streamlining Prudential Policy

- 108 Documents

- 1,000 pages

• Approval Processes

• CDD / Account Opening

Bahamian Economic Growth

19

We Are A Cash-Heavy

Jurisdiction

2010 2017

Notes in

circulation

$290 million $411 million

Credit card

purchases

$521 million $715 million

Cheque numbers 3.5 million 2.5 million

Cheque value $6.8 billion $7.2 billion

RTGS numbers 60,000 94,000

RTGS value $11.6 billion $29.3 billion

Bahamian Economic Growth

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What Could We All Do?

•Consume Less, Save More

•Spend to Reduce Costs

•Buy Bahamian

•Support Sound Policies

•Follow the Rules

ANY QUESTIONS?

THANK YOU!

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Bahamian Economic Growth