Bahamas further relaxes capital controls

The Central Bank of the Bahamas has relaxed some of its capital controls, allowing domestic companies in certain industries to access foreign currency for investment purposes.

In a statement released on March 29, the central bank said these “liberalisations” will become operational on April 24.

“Selected categories of Bahamian-owned businesses with either broad foreign exchange earning potential or that are engaged in activities that promote national development goals, will be able to obtain foreign currency funding either from local commercial banks or from external sources,” the central bank announced.

It specified a number of sectors in the release, including agriculture, tourism, construction, health and infrastructure.

In addition to obtaining funds, the selected businesses will be able to engage in “equity agreements” or joint ventures with overseas partners.

“The limits in most of these cases will be $5 million per entity every five years,” the bank said.

Non-resident-owned firms will also feel the benefit of the relaxed controls: under the new legislation, they will be able to obtain financing from international banks licensed to operate in the Bahamas.

Furthermore, the central bank announced “increased accommodation” is being made for firms to receive financing through organisations such as the Inter-American Development Bank and the World Bank.

Since the late 1990s, the central bank has been gradually rolling back capital restrictions which were put in place by the government in 1974.

The central bank said it expects the macroeconomic impact of the reforms to be “positive”, providing a “gradual stimulus” to the business environment.

“No adverse balance of payments and external reserves impacts are expected, given the deliberately limited sectors for which such funding would be accessible, and the balance between foreign currency inflows from various sources and subsequent outflows for financing-related activities,” the statement said.