By TAMARA McKENZIE,Guardian Staff Reporter tamara@nasguard.com
The Progressive Liberal Party expressed on Thursday that it supported the decision of the Central Bank of The Bahamas to lower the Discount Rate by 50 basis points to 5.25 per cent with a cut in the Bahamian prime rate by the same margin.
The announcement was made Thursday by Progressive Liberal Party Chairman, Raynard Rigby.
On Wednesday, Central Bank Governor, Julian Francis said the reduction in the bank's interest rates was in response to the growing level of external reserves in the country over the past two years. The Discount Rate, the rate at which the Central Bank provides emergency financing facilities to the commercial banks, was reduced from 5.75 to 5.25 per cent. The Central Bank also asked commercial banks to reduce their Prime Rate from 6.00 to 5.50 per cent to make loans more affordable for their customers, and such a request was agreed to.
Mr Rigby outlined that given the historic state of external reserves, which is presently pegged at well over $70 million, the PLP believes that the success of the Bahamian economy should be shared with the people of The Bahamas.
He said the decision of the Clearing Banks Association to drop the prime rate to 5.5 per cent must be a step in the right direction for the long-term sustainability of the Bahamian economy and the move should also serve as an important catalyst for increased local investment in the economy.
"It is also important to note that when the PLP came to office in May 2002, there was much uncertainty in the Bahamian economy and many businesses were speaking a language of economic doldrums, " he said.
"Just short of three years and with unprecedented inflows of direct foreign investment, the economy has begun on an upward surge that will no doubt propel the external reserves to $1 billion before the next general elections."
Mr Rigby said the present state of the external reserves must be viewed in the context of the overall fiscal performance and management of the economy during the years of boom under the previous administration. He claimed that it is a matter of public record that during the five years of positive economic growth under the FNM, the external reserves were not in the present region now being experienced.
He noted however, that one of the chief indicators of the soundness of the Bahamian economy lies in the strength of the external reserves and thereby the nation's ability to withstand unexpected shocks.
"There must be no doubt that the present level of the external reserves is welcoming proof of the viability of our economy.
Fiscal prudence and wise and sensible financial planning by this PLP administration have been amongst the reasons why the reserves are at such an historic level.
"Even in the midst of the national restoration and recovery efforts brought on by the two devastating hurricanes, the Bahamian economy has performed well beyond the expectations of many," Mr Rigby touted.
The PLP Chairman said with the soon establishment of a Venture Capital Fund, Bahamians should not doubt that this is the season for progressive entrepreneurs to creatively design their financing strategies and to find new ways to take advantage of the liquidity that exists in the traditional funding sector.
He said with more money in circulation it is anticipated that many more Bahamians will seize the opportunity to open and operate small businesses and thereby guarantee the continuing of this upward economic surge.
Caption
Raynard Rigby Progressive Liberal Party Chairman
