Bahamas

Politics:

• Analysis

  Bahamas politics: Crackdown on crime

  FROM THE ECONOMIST INTELLIGENCE UNIT

  In the run-up to the 2012 general election, due by next May, the Bahamian government has announced tough measures to crack down on a recent upsurge in violent crime. On October 3rd, the prime minister, Hubert Ingraham, announced the establishment of two new courts to deal specifically with crimes relating to drugs and the illegal possession of firearms. He also announced a 30-day gun amnesty programme—after the November 4th deadline, anyone convicted of illegal possession of a firearm (or ammunition) will be sentenced to a mandatory minimum four-year prison term.

  The ability of magistrates to hand down tougher sentences has also been strengthened, with the possibility of sentencing offenders—including those on drugs and weapons charges—to up to seven years in prison (raised from five years previously). Mr Ingraham also announced that amendments to the Firearms Act and the Dangerous Drugs Act are in the planning stage and that new legislation will strengthen law enforcement powers to address the sale of stolen goods and the proceeds of crime via third parties. To help at-risk youth, the government pledged to allocate B$1m (US$1m) to initiate programmes in the urban areas of Nassau and Freeport. Two hundred police officers will be added to the national police force to help to maintain law and order.

  The new measures are long overdue. The rate of violent crime, and in particular the homicide rate, has been rising at an alarming rate. New records for murders have been set in four of the past five years. Crime statistics show that in the first nine months of 2011, cases of murder, rape, armed robbery and theft all increased markedly. As of early October, 104 people had been killed in 2011, exceeding the full-year murder count for 2010 of 94. Considering the country's heavy dependence on tourism, there is widespread concern over the impact that such a deterioration in the security situation will have on the struggling economic recovery.

  The opposition People's Liberal Party (PLP) criticised the Free National Movement (FNM) government's anti-crime plan, arguing that a more holistic approach is needed to fight crime effectively. It has proposed that those caught in possession of high-powered firearms be tried in the Supreme Court, which would allow greater sentencing power than that proposed by Mr Ingraham through the magistrates' courts. The party also criticised the government for cancelling the previous PLP administration's Swift Justice programme in 2007—a programme directed at speeding up the criminal justice system— when it came to office for "purely political reasons despite its track record of success". The PLP argues that under its Project Safe Bahamas plan (a party initiative to combat crime), murder suspects should be tried within 12 months of arrest, in an effort to reduce the legal system's extensive backlog of cases.

  Death penalty legislation pending

  The severity of the crime problem has also prompted a renewed discussion over the use of the death penalty. Mr Ingraham indicated in his October speech that legislation will soon be brought to parliament to retain the death penalty and make it a mandatory punishment for certain crimes, as well as adding an alternative penalty of life imprisonment (which would be strictly enforced as a sentence for the remainder of the offender's natural life). The death penalty will be a mandatory sentence for anyone convicted of killing a member of the Royal Bahamas Police Force, Royal Bahamas Defence Force, Department of Customs, Department of Immigration, the judiciary and the prison services system. The death penalty would also be mandatory if a person is convicted of murdering someone in the commission of a robbery, rape, kidnapping or an act of terrorism. In other murder cases where a death sentence is not applicable, the penalty will be a term of imprisonment of between 30 and 60 years.

  The legislation comes months after Mr Ingraham promised to deliver it following the London-based Privy Council's decision in June to overturn the death sentence of a convicted murderer, Maxo Tido. The Privy Council ruled that the 2002 murder committed by Mr Tido did not fall into the category of "worst of the worst" and therefore the death penalty ought not to apply. However, even if the Privy Council had upheld his death sentence, under a 2006 ruling of the Privy Council—that the mandatory death sentence in the Bahamas was unconstitutional—he could not have been executed. The government hopes that the new legislation will address this. The last time the death penalty was carried out in the Bahamas was in January 2000. At that time, the Privy Council indicated that the Bahamas was legally and constitutionally permitted to execute convicted murderers.

  October 18, 2011

• Background

  Bahamas: Key figures

  Hubert Ingraham

  The prime minister. Mr Ingraham is an able and experienced political leader, who was previously prime minister between 1992 and 2002 and whose return in 2005 to the leadership of his party, the Free National Movement (FNM), facilitated its election victory in 2007.

  Tommy Turnquest

  Minister of immigration and national security. Mr Turnquest was the leader of the FNM between 2001 and 2005, following a divisive power struggle. He is still an important cabinet figure, but his influence was lessened by poor electoral results under his leadership and by comparisons with Mr Ingraham.

  Perry Gladstone Christie

  The current leader of the opposition and previous prime minister (2002-07), Mr Christie oversaw a boost in tourism-related property development, but his position was damaged by his party's election loss in 2007.

  The judiciary

  The judiciary is independent and is modelled broadly on the British system. The final court of appeal is the Judicial Committee of the Privy Council, which is based in London, but has occasionally sat in Nassau.

  The legislature

  The 1973 constitution is similar to that of most former British colonies. Elections for the House of Assembly are held every five years, unless parliament is dissolved earlier. The prime minister is the leader of the majority party in the Assembly and chooses a cabinet with at least eight other ministers. The 16 members of the Senate (the upper house) are appointed by the governor-general, nine on the advice of the prime minister, four on the advice of the leader of the opposition and three on the advice of the prime minister after consultation with the leader of the opposition. The British monarch is head of state, and is represented by a governor-general, currently Arthur Hanna. The latter is nominated by the Bahamian prime minister, but takes no direct part in government. For most purposes, the governor-general acts on the advice of the prime minister or, when appointing a prime minister, in accordance with the Assembly majority. Policy formation and administration is reasonably effective. A local government system for Grand Bahama and the Family Islands—the Bahamian islands other than New Providence—was introduced in 1996. Elected councils in 23 local government districts are responsible for maintaining government buildings and for road traffic, town planning and business licences. In the larger districts, a second tier of elected town councils has minor responsibilities.

  Media services

  The media is generally free. The government owns and operates four radio stations and one television channel; four independent radio stations also broadcast from Nassau, and one from Grand Bahama. Most islands have a cable television service. The Nassau Guardian, Tribune, Bahama Journal (evening) and Freeport News are daily newspapers. The Punch is a widely read, twice-weekly tabloid paper. Some Family Islands also have weekly newspapers.

  July 29, 2008

• Structure

  Bahamas: Political structure

  Official name

  Commonwealth of the Bahamas

  Form of state

  Representative democracy

  Head of state

  Queen Elizabeth II, represented by a governor-general appointed on the advice of the Bahamian cabinet

  The executive

  The prime minister, appointed by the governor-general, heads a government responsible to the House of Assembly (the lower house)

  National legislature

  Bicameral; the 16-member Senate (the upper house) has nine members appointed on the advice of the prime minister, four on the advice of the opposition leader and three on the advice of the prime minister, after discussion with the opposition leader; the 38-member lower house is directly elected by district and sits for no longer than five years

  Legal system

  Based on the British system, with a UK-style hierarchy of courts: magistrates court, Supreme Court, Court of Appeal, and in some cases the UK Privy Council

  National elections

  May 7th 2012; next general election due by May 2017

  National government

  The Progressive Liberal Party holds 29 seats in the lower house

  Main political organisations

  Government: Progressive Liberal Party (PLP)

  Opposition: Free National Movement (FNM), nine seats

  Key ministers

  Prime minister & minister of finance : Perry Christie

  Deputy prime minister & minister of works & urban development: Philip Davis

  Agriculture, marine resources & local government: Alfred Gray

  Attorney-general & legal affairs: Allyson Maynard Gibson

  Education, science & technology: Jerome Fitzgerald

  Environment & housing: Kendred Dorsett

  Health: Perry Gomez

  Financial services: Ryan Pinder

  Labour & national insurance: Shane Gibson

  National security: Bernard Nottage

  Social services: Melanie Griffin

  Tourism: Obediah Wilchcombe

  Transport & aviation: Glenys Martin

  Youth, sports & culture: Daniel Johnson

  Ministers of state

  Aviation & transport: Hope Strachan

  Finance: Michael Halkitis

  Foreign affairs & immigration: Frederick Mitchell

  Investments: Khaalis Rolle

  Legal affairs: Damian Gomez

  National security: Keith Bell

  Governor of the Central Bank

  Wendy Craigg

  October 01, 2012

Economy:

• Background

  Bahamas: Economic background

  Bahamas: economic structure, GDP by sector
  (% of total; fiscal years Jul-Jun)
  	2000/01	2001/02	2002/03	2003/04	2004/05
  Agriculture & fishing	2.8	2.5	3.1	3.1	2.4
  Industry	11.0	9.7	9.8	9.6	9.2
  Construction	9.9	8.7	8.6	8.4	8.0
  Manufacturing	4.6	5.3	5.3	5.2	5.3
  Services	81.6	82.5	81.8	82.1	83.1
  Source: Caribbean Development Bank, Social and Economic Indicators.

  Download text file (csv format)

  July 29, 2008

• Structure

  Bahamas: Economic structure

  Economic structure: Annual indicators

  	2008a	2009a	2010a	2011a	2012b
  GDP at market prices (B$ bn)	8.2	7.7	7.8	7.8	7.8
  GDP (US$ bn)	8.2	7.7	7.8	7.8	7.8
  Real GDP growth (%)	-2.3	-4.9	0.2	1.6	2.3
  Consumer price inflation (av; %)	4.5	2.1	1.3	3.2	2.5
  Population (m)	0.3	0.3	0.3	0.3	0.4
  Exports of goods fob (US$ m)	955.9	710.7	702.4	834.9	790.0
  Imports of goods fob (US$ m)	-3,198.9	-2,535.9	-2,591.6	-2,965.6	-2,882.3
  Current-account balance (US$ m)	-1,222.1	-809.0	-814.0	-1,090.9	-1,139.1
  Foreign-exchange reserves excl gold (US$ m)	567.9	1,009.8	1,044.2	1,070.2	1,095.0
  Exchange rate (av) B$:US$	1.00	1.00	1.00	1.00	1.00
  a Actual. b Economist Intelligence Unit estimates.

  Download the numbers in Excel

  Origins of gross domestic product 2011	% of total	Components of gross domestic product 2010	% of total
  Financial services & real estate	11.8	Private consumption	66.8
  Hotels & restaurants	15.8	Government consumption	14.1
  Wholesale & retail trade	12.8	Gross domestic investment	21.3
  Industry	7.7	Change in stocks	1.1
  Public administration & defence	5.8	Exports of goods & services	44.4
  Construction	7.3	Imports of goods & services	46.6
  Communication & storage	2.9
  Education	4
  Healthcare	3.7
  Principal domestic exports 2011	% of total	Principal imports cif 2011	% of total
  Chemicals	34.5	Mineral fuels	27.3
  Mineral fuels	29.7	Machinery & transport equipment	17.1
  Machinery & transport equipment	11.9	Food & live animals	13.6
  Food & live animals	10.5	Manufactures	13.1
  Crude materials & inedibles excl fuels	6.2	Chemicals	11.3
  Main destinations of exports 2011	% of total	Main origins of imports 2011	% of total
  US	28.2	US	25.8
  Singapore	26.9	India	18.7
  Germany	8.6	South Korea	14.4
  EU	2.6	Venezuela	9.7
  Dominican Republic	5.2	Singapore	7.8

  Download the numbers in Excel

  Download text file (csv format)

  October 01, 2012

• Outlook

  Bahamas: Country outlook

  Bahamas: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: Buoyed by high public support and an overwhelming majority in the legislature, the Bahamas' prime minister, Perry Christie, will face little resistance to implementing his government's agenda in 2012-13. High unemployment, the slow pace of economic recovery and a recent rise in crime are the main political challenges confronting the government. After narrowing to an estimated 3.9% of GDP in 2011/12 (July-June), on the back of privatisation income, the fiscal deficit will widen to 4.1% of GDP in 2012/13, as the government pursues an expansionary fiscal policy. The government projects a wide fiscal deficit throughout the period to 2014 and beyond, driving a marked deterioration in the debt/GDP ratio to above 50% of GDP. The Economist Intelligence Unit expects further investment in the tourism and construction sectors in the 2013-14 forecast period. An easing of international commodity prices in 2012 helped to contain consumer price inflation to an estimated average of 2.5%. Improving consumer demand will lift prices modestly in 2013-14, to an average of 2.9%. A decline in construction-related imports and a gradual recovery in tourism will support a narrowing of the current-account deficit, from a peak of 14.5% of GDP in 2011-12 to 11.5% of GDP in 2014.

  DOMESTIC POLITICS: Mr Christie took office for a five-year term in May 2012, following a landslide election victory for the centre-left Progressive Liberal Party (PLP). The previously governing centre-right Free National Movement (FNM) has now become the main opposition. Mr Christie scored one of the biggest electoral wins ever witnessed in the Bahamas. However, the PLP will face the same ills that troubled the previous FNM government, namely high unemployment, rising crime rates and a tepid economic recovery prone to setbacks. The FNM's poor election performance reflected a strong rise in nationalist sentiment brought on by opposition to its programme of privatisation and foreign investment in telecommunications, tourism and other infrastructure sectors-policies that the PLP has pledged to roll back. However, with the possible exception of a re-nationalisation of the Bahamas Telecommunications Company, we do not expect a wholesale change to the otherwise pro-business stance of the Bahamas government, given the importance of foreign investment to the economy. Security will remain a major issue, in spite of legislation introduced under the previous government to clamp down on firearms use and drug-related crime. An increase in labour disputes and trade union agitation is possible, as organised labour seeks to take advantage of the PLP's deeper sympathy with labour organisations. The government's relations with the public-sector unions were extremely fragile under the FNM administration, and ongoing fiscal reforms to keep public spending in check will prevent the government adopting a more expansionary fiscal policy to boost public-sector wages and employment opportunities. Despite these difficulties, governance is unlikely to be damaged within 2013-14. Mr Christie represents a fresh governing style, and he will enjoy broad public support and an extended "honeymoon" period in the first half of his term. An October by-election will test voter approval of the new government's policies in its first 100 days. However, losing the ballot would not threaten Mr Christie's grip on power, given his large majority in the legislature.

  INTERNATIONAL RELATIONS: Efforts to control drug-trafficking through the Bahamas will remain a priority for the new government and will form the basis of relations with the US, which will remain generally positive. The PLP will continue to pursue friendly relations with China, a major source of investment in the tourism sector in recent years. However, the issue of imported Chinese labour as part of China's investment strategy will remain publicly contentious, and may affect relations with the Asian nation if the government is forced to review existing agreements. Controlling illegal immigration will remain a priority for the security forces; in particular, curbing the entry of undocumented migrants from neighbouring Haiti is a sensitive political issue, given that country's economic and security frailties. The authorities' handling of the matter, which will continue to arouse strong emotions within the Bahamas, will attract ongoing close international scrutiny. A small but vocal section of the public will continue to oppose any future free-trade agreements, mainly on ideological grounds, but the Bahamas will remain a member of the Caribbean Community, and diplomatic relations with its neighbours and trade partners will remain generally positive.

  POLICY TRENDS: Mr Christie will prioritise expansionary spending over fiscal consolidation in a bid to stimulate economic growth, and boost employment opportunities and domestic demand. Any retrenchment in public spending and fiscal consolidation will, therefore, be piecemeal and subject to setbacks. Mild real GDP growth will limit revenue growth, which has fallen below budget targets consistently since 2009. An end to income from privatisations will limit prospects for a reduction of the public debt burden, which has grown rapidly following wide fiscal deficits averaging 4.3% of GDP in 2009-11. Despite an anti-privatisation stand by the new government, the Bahamas will continue to benefit from an open economy and a relatively well-off and educated workforce. However, efforts to diversify economic activity are likely to be weak, as tourism will continue to dominate investment flows and government thinking. The government will seek to attract a greater number of visitors and investment from faster-growing markets, such as Latin America and Asia. In terms of monetary policy, there is an ample stock of foreign reserves, which will be supportive of the parity exchange-rate peg with the US dollar, thereby underpinning confidence in monetary stability. Reforms will continue to move the country gradually towards becoming a member of the World Trade Organisation. They will include new customs legislation, amendments to existing intellectual property legislation, a foreign investment law, the introduction of new rules governing technical standards and sanitary and phytosanitary standards, and the operation of a competition law regime. After narrowing to an estimated 3.9% of GDP in fiscal year 2011/12 on the back of privatisation income-despite budget revenue targets being missed-the fiscal deficit will widen again in fiscal year 2012/13, as the new government intends to accelerate current and capital spending, while revenue growth remains at best tepid and income from privatisations peters out. We expect the fiscal deficit to widen to 4.1% of GDP in 2012/13, before narrowing gradually to around 3.4% of GDP in 2014/15. The officially projected debt/GDP ratio is expected to climb sharply, from an estimated 46.2% in 2011/12 (up from 38.6% three years previously) to 50.6% in 2012/13 and 54.5% in 2013/14. The weak fiscal outlook and rising debt burden prompted Moody's Investor Services, a credit ratings agency, to downgrade the outlook for the Bahamas' investment-grade sovereign debt rating (from stable to negative) at the end of 2011. We expect the Central Bank of the Bahamas to keep supporting the currency peg to the US dollar by maintaining foreign reserves equivalent to a minimum of 50% of total monetary aggregates.

  ECONOMIC GROWTH: The domestic economy will continue to recover in 2013-14, although growth will be hindered by a tepid US recovery and persistent, albeit declining, risks for the global economy, emanating primarily from the euro zone. We estimate real GDP growth of 2.3% in 2012-a slight pick-up from growth of 1.6% in 2011. A stronger near-term recovery in activity will be prevented by only a modest increase in tourist arrivals from the US. Growth will be underpinned by foreign investment in tourism-related infrastructure projects, which will boost construction activity, employment and income, leading to a moderate recovery in domestic demand and a slightly quicker pace of growth, to an average 2.6% of GDP in 2013-14. Still faster rates are likely to be achieved beyond 2012-13 to 2014, when major new tourism capacity comes on stream and the US recovery gains sufficient strength to boost arrivals and visitor spending levels, buoying Bahamian domestic demand. After spiking in 2010, as a result of weaknesses in the construction and tourism sectors, unemployment will decline gradually in 2012-13. Private-sector projects, particularly in the real estate and tourism sectors, will pick up in line with an easing of financing restrictions and a recovery in foreign demand. The construction sector will benefit from several large-scale tourism-related investments, particularly the US$3.4bn Baha Mar tourism complex, which is due to begin receiving its first visitors in late 2014. However, renewed investment activity will take time to feed through to the broader economy, keeping GDP growth below potential in the near term. We expect inflation to stay contained in 2012-13, despite some volatility in energy prices that put upward pressure on the consumer price index (CPI) in 2011. A moderation of global energy and food prices will be supplemented by subdued demand-side pressures, in the context of only mild GDP growth. As a result, we estimate that CPI will rise from an estimated average of 2.5% in 2012 to 2.9% in 2013 and 3% in 2014.

  EXTERNAL ACCOUNT: The trade deficit spiked to a wide US$2.2bn (27% of GDP) in 2011, as a result of high international oil prices and investment in construction. Despite an easing of commodities prices, we estimate a similar trade deficit in 2012 before a gradual narrowing takes place in 2013-14, as investment projects mature and construction-related import demand declines, offsetting a gradual recovery in other imports. The current-account deficit will narrow from an estimated peak of 14.6% of GDP in 2012 to 12.8% of GDP in 2013 and 11.5% of GDP in 2014, owing to trade trends and improving services inflows. Tourism will support the small services surplus, but recent strong gains in tourist arrivals and earnings since 2010 are set to level off until an upturn in 2014. Remittance income from Bahamians working abroad will stage a mild recovery in 2013-14, as job prospects in the US pick up. The US will remain the Bahamas' most important trading partner, as the source of around four-fifths of total imports and the market for over three-quarters of all exports.

  October 04, 2012

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Country Briefing

Land area

13,939 sq km; comprises 700 islands and more than 2,000 islets (cays), 80 km off the south-eastern coast of Florida

Population

307,451 (mid-2008 official estimate)

Main town

Nassau (capital), population 212,432 (2000)

Climate

Subtropical

Weather in Nassau (altitude 4 metres)

Hottest month, August, 24-32°C; coldest months, January and February, 17-25°C (average monthly minimum and maximum); driest month, December, 33 mm average rainfall; wettest month, September, 175 mm average rainfall

Language

English

Measures

US system

Currency

Bahamas dollar (B$) = 100 cents; the Bahamas dollar is pegged at parity with the US dollar at B$1:US$1

Fiscal year

July-June

Time

5 hours behind GMT; 4 hours behind GMT from first Sunday in April to last Sunday in October; the time zone coincides all year round with US Eastern Standard Time

Public holidays

January 1st, Good Friday, Easter Monday, Whit Monday (seven weeks after Easter Monday), first Friday in June (Labour Day), July 10th (Independence), first Monday in August (Emancipation Day), October 12th (Discovery Day), December 25th-26th

July 25, 2012