Jan 18, 2023

The Bahamian people have yet to receive a satisfactory answer from the Davis administration on how it

was able to circumvent the law and access the country’s external reserves in the SDRs held by the Central

Bank. The Central Bank Act in Section 17 (2) (f) unequivocally states that the IMF’s SDRs are part of the

official external reserves of the Central Bank.

These SDRs reside on the balance sheet of the Central Bank as detailed in the bank’s most recent audited financial statements. They are not and have never been the property of the central government for reasons that are well known and well understood. Contrary to the Ministry of Finance’s press statement of January 4, 2023, the government is in fact borrowing these assets from the Central Bank and as both the Ministry of Finance and the Central Bank have noted, they are required to pay interest rates and must repay the funds.

The Ministry is misleading the public when it says that it is not borrowing the funds from the Central Bank, which maintains these assets today on its balance sheets. We repeat however that it is clearly and patently against the law for the government to get any advance of funds from the Central Bank, except for a capped amount of very short term lending.

Section 21 of the Central Bank Act is explicitly clear on this point. If the government wants to take the step and become the first government to tap into the country’s foreign reserves to finance its ongoing obligations, it has to come to Parliament and explain what changed in their fiscal plan to make this necessary. We remind the Davis administration that in July 2022, it published its Annual Borrowing Plan and it made zero mention of tapping into the country’s foreign reserves as part of its plan.

It must explain to the Bahamian people what set of urgent circumstances caused it to deviate from its plan and what was such the rush that it had to break the law, instead of coming to Parliament and

changing the law to accommodate their desired drawdown of foreign reserves. The Davis administration continues to show no regard for the laws of the law. It breaks the country’s procurement law daily in the award of millions of dollars of contracts. It has broken the Fiscal Responsibility Act. It now is in active breach of the Central Bank Act in what amounts to an illegal loan received from the Bank. This cannot persist.

J. Kwasi Thompson

Member of Parliament East Grand Bahama/Shadow Minister for Finance January 15, 2023

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