In his mid-year budget presentation to Parliament today, the Rt. Hon. Hubert Ingraham spoke to improving the business environment, touching specifically on the streamlining of the regulation of the financial services sector. He said, “The Government is moving to streamline the regulation of non-bank financial services. Specifically, we intend to merge the Securities Commission, the Office of the Registrar of Insurance Companies and the Compliance Commission to create a new Financial Services Authority. The goal is to reduce burdens on the regulated financial sector by simplifying authorization requirements and data reporting requirements. As well, efficiency gains will be achieved by ensuring joint operations in terms of on-site inspections, authorizations, information technology and human resources.”
Already, the physical consolidation of the three agencies has been achieved, reportedly advancing their ability to cooperate on some administrative and regulatory levels.
The Prime Minister indicated that a detailed plan of implementation is being developed with a view to having the new Authority operational this year.
On “Enhancing the Competitiveness of Financial Services” , the Prime Minister reviewed the April 2 2009 – publication of an OECD list (the so-called Gray list) of 38 countries assessed by the Global Forum as non-cooperative jurisdictions in relation to international standards for the exchange of tax information. The Bahamas was on that list. He said the list was released immediately following the G20 Summit in London, and the G20 in fact agreed to take action against the non-cooperative jurisdictions which were given until 31st March, 2010 to exit the list upon the execution of at least 12 tax information exchange agreements. “On April 2, 2009, The Bahamas had one agreement executed with the U.S. We have moved aggressively to meet the requirement. At present, there are 11 signed agreements and, by the end of March, we will have executed 19 agreements to ensure our exit from the grey list.”
Parliamentarians also were advised of plans to the Investment Funds Act to remove restrictions that impact negatively on Bahamian investment managers and advisors and the competitiveness of The Bahamas as a financial centre.
Additionally, the Prime Minister said, “We are taking a number of steps to strengthen the Bahamian business environment. Specifically, proposed amendments to the Business Licence Act will soon be introduced to simplify the legal and regulatory requirements to operate a business. We also propose to simplify the fee structure for business licences.“
THE ECONOMIC CONTEXT
On the occasion of his mid-year budget report, the Prime Minister also took the opportunity to speak to the global economic outlook, noting that the global economy had pulled out of its deepest slump in recent history and bounced back in the second half of 2009. “It is recovering faster than had been expected previously and, according to the IMF’s January World Economic Outlook, world growth is now projected at near 4 per cent in 2010 and 4.3 per cent in 2011.” Looking at domestic economic developments, during 2009, the Bahamian economy faced significant challenges as the adverse effects of the global financial and economic crisis continued to impact real sector developments.
Although global and U.S. economic indicators have shown some improvement in recent months, the tentative pace of the recovery, combined with an observed shift in U.S. consumption patterns towards increased savings, will continue to constrain the return to positive growth momentum for the Bahamian economy in the short-term; however, he said “The economy is projected to strengthen as we move through 2010 and positive growth on an annual basis is expected to return in 2011 and beyond.”
The Prime Minister said the regular IMF Article IV Consultation planned for May will present an objective and expert assessment of the Bahamian economy and outlook, and that the Report from that Consultation will be presented to Parliament.