The failure of Baha Mar to open during the first six months of 2015, as projected by the Central Bank of The Bahamas (CBB), will likely have ramifications for the already slow pace of economic growth, but Central Bank Governor Wendy Craigg insists that the mega resort is only responsible for part of the country's economic momentum.

In addition to the political administration, external credit ratings agencies and multilateral lending institutions, Central Bank continues to highlight the importance of Baha Mar. The bank's predictions, as contained in the Central Bank's Annual Report and Statement of Accounts for 2014, do not contemplate what the economic fallout will be if the megaresort fails to open this year.

"We haven't considered that. In our view it is going to be opened, it's just a matter of when. Since it won't happen in the first six months of the year that mean's that the benefits will be delayed. (The benefits) will be pushed further out," Craigg said.

She told Guardian Business yesterday that this "might" cause a revision in the projected economic momentum and output in 2015.

"It might," she said. "It might, when the Department of Statistics measures real output."

"Certainly, we won't experience the impact for the entire year. So in effect what will happen is that you will have to look again at the outlook for the year, and the estimates for real growth."

The resort's troubles have been written about in depth locally and abroad, from persistent issues with labour relations to multiple delayed openings to a very public spat between the resort developer and the general contractor. The troubles have been so deep -- despite persistent efforts to put on a good face, as it were -- that the resort has cancelled reservations until August, and is now choosing to not posit an opening date in the public space.

So the Central Bank's projection that the resort's opening within the first half of the year is already problematic: the resort will not open during the first six months of 2015 after all. Nonetheless, Craigg said that whenever it does open, "it will certainly provide an uplift to the economic momentum of the country. That is important."

"It will provide an uplift. The economy continues to grow at a very mild pace, but with the opening of Baha Mar we expect to see an uplift in the economic momentum."

She admitted that the Baha Mar delays will have an effect on real economic output, but stressed the positive outlook nonetheless.

"You have to balance (the resort's delay) with the ongoing recovery that we are experiencing with the existing tourism business. From the figures that we see at the bank, it shows that there is a pickup in the business even without Baha Mar," Craigg said.

Broad View
Baha Mar is not only important in terms of GDP growth.

The resort obviously has an effect on employment, for instance, with spillover effects to other areas in the economy, driven -- in that instance -- by the spending power of those who will be employed by the resort.
Governor's View

Meanwhile, in her Foreword to the Central Bank's Annual Report for 2014, Craigg noted that early indicators show that The Bahamas' real output grew by one percent in 2014. However, she acknowledged that this growth was not accompanied by "significant employment gains." She identified real sector growth in both tourism -- driven by better performance in the stopover segment -- and construction, supported by foreign investment flows.

Given the bank's role in terms of monetary policy, Craigg noted that these real sector gains, together with proceeds from government's foreign currency borrowings in January, kept external reserves in line with the broad international benchmark position.

Craigg also reported a reduction in the government's overall deficit for FY2013/14, and said she looked for further improvement following the January 2015 implementation of the 7.5 percent value-added tax (VAT) regime.

The governor also noted the persistence of elevated loan arrears, which limited the opportunities for a restart in private sector growth for the fifth consecutive year.

"Advanced preparations are also underway to facilitate the Bank's assumption of the supervision and regulation of credit unions in the first half of 2015. As part of the reforms aimed at safeguarding the financial system, the Bank issued the draft Credit Reporting Bill, and accompanying regulations, for public consultation and launched the beginning of a comprehensive public awareness campaign," Craigg said.

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