Categorized | National News

Halkitis: “Our Dollar Will Not be Devalued”

In the face of credit downgrades and recent massive job losses, it led many to speculate whether the Bahamian dollar will be devalued; and State Minister of Finance yesterday assured that this is certainly not the case.

Despite the Bahamas’ recent credit downgrade by international investment company Moody’s, the minister reiterated that “there is a silver lining” in the midst of it all.

Moody’s earlier this week downgraded The Bahamas credit rating from BAA2 to BAA3, pulling it down by one notch.

After news of the down grade, many perceived that the country’s currency would be devalued.

However, Mr. Halkitis sought to clear up what he called a misconception.

“The Bahamian dollar is in no way in danger of devaluation. Devaluation would be directly related to foreign reserves. It’s connected to the activity that you have in your economy and how it generates these reserves and the demand. So we have a comfortable level of reserves and in cases where you didn’t have a comfortable level of reserves, the bank has mechanisms whereby they can manage that,” he said.

Some of Mr. Halkitis’ optimism is drawn from the promise of Baha Mar’s remobilisation and other government related projects.

Mr. Halkitis responded to the question of why the economy is not further ahead, despite the numerous projects announced in parliament by Prime Minister Perry Christie.

“One of the reasons was that as a result of Hurricane Joaquin, we had significant damage to the docking facilities from Morton. So they saw something in the region of a 41 percent decline in the volume of their exports. They also pointed to the fact that in pharmacies, there was a significant reduction in the amount of exports,” he said.

“Thirdly there was the amount of imports which were related to the construction of Baha Mar. So as construction neared completion you had a significant fall off in the number of imports,” Mr. Halkitis said.

Mr. Halkitis pointed out that the size of the country’s economy has been underestimated for some time; and he said that with the government now realizing the economy’s capacity, it can better accommodate the demand.

“For years we estimated the true size of the economy. Many were operating outside the form of the economy. So Moody’s depended a lot on the reduction of the revision downwards,” he said.

“Those are some of the things that we are addressing in terms of our ability to really assess what’s going on and the true size of our economy,” he added.





Written by Jones Bahamas

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