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Caribbean Islands
Index
Although government policy was overtly capitalist, state ownership
was significant in the economy. In addition to the central
government, the public sector also consisted of the National
Insurance Board, which was responsible for administering the
country's social insurance program, and six nonfinancial
corporations: four in public utilities (Bahamas Electricity
Corporation, Bahamas Water and Sewer Corporation, Bahamas
Telecommunications Corporation, and the Broadcasting Corporation of
the Bahamas) and two tourism-related firms (Bahamasair and the
Hotel Corporation of the Bahamas). According to the World Bank,
these public corporations performed well in the early 1980s;
significant financial improvements occurred in 1983 and 1984 and
were responsible in part for improvement of the overall financial
position of the public sector. In particular, the electricity and
hotel corporations registered operating balance surpluses by 1984
after several years of large capital expenditures.
Central government revenue increased steadily in the first half
of the 1980s, from US$261 million in 1980 to US$350.3 million in
1984; estimates for revenue in 1985 and 1986 were US$424 and US$458
million, respectively. Expenditures also increased during the same
period, from US$258.9 million in 1980 to an estimated US$458
million in 1986. During most of the period, the government recorded
a fiscal deficit on its public accounts; a low of US$81.2 million
was recorded in 1983 and was primarily the result of capital
expenditures in the hotel sector of the tourist industry. In 1984
capital expenditures decreased and brought the fiscal deficit down
to US$15.9 million. Projections for 1985 and 1986 were for small
surpluses in the public accounts (see table 7, Appendix A).
The income tax structure in the late 1980s was relatively
inelastic because the Bahamas had no personal or corporate income
taxes. Revenue was tied to indirect taxation on international
trade, in the form of import, export, and stamp duties, and to
direct taxes on tourist items, such as hotel rooms and casino
gambling. Other direct taxes included a property tax, a motor
vehicle tax, and a stamp tax. International trade taxes contributed
the most to revenues, accounting for 70 percent of all tax revenues
and 55 percent of total government revenues in 1984. In the first
half of the 1980s, total tax revenue constituted up to 80 percent
of total government revenues.
Nontax revenue included administrative fees and charges, income
from government property, interest and dividends, and
reimbursements. The largest of these were administrative fees and
charges, which almost doubled in 1980; in 1984 they accounted for
40 percent of all nontax revenue and almost 9 percent of total
revenue. Also in 1984, property revenue increased when the
government signed a ten-year US$100 million agreement with the
United States to lease submarine testing facilities on Andros
Island. In the first half of the 1980s, nontax revenue generally
accounted for approximately 20 to 27 percent of total revenue.
In the early 1980s, over 40 percent of government expenditures
went to wages and salaries for public employees. Increases in
capital expenditures in the 1981-83 period were responsible for
much of the growth in total expenditures. In 1984, however, capital
expenditures declined after completion of a major hotel,
convention, and casino project. Much of the increase for this year
went to current costs, principally salary increases. In the 1985
and 1986 budgets, the emphasis was on education, health, and police
services.
A significant portion of total government outlays in the mid-
1980s was devoted to servicing the public debt. Debt servicing
accounted for 18 percent of total expenditures in 1984; it was
projected to reach 25 percent in 1985 before dropping to 23 percent
in 1986. Ironically, the debt problem was a direct result of the
high per capita income in the Bahamas. Income levels precluded the
nation from obtaining soft loans from international financial
institutions, including the World Bank; as a consequence, the
government was forced to rely on Bahamian banks for credit.
Outstanding public sector external debt increased by almost
US$130 million in 1981-82 as a result of two loans that financed
projects for the hotel corporation. The total external debt of the
public sector reached a high of US$237.9 million in 1983 but had
dropped to US$209.3 million by late 1984. The decline was brought
about by the completion of the hotel project and also by the
significant principal repayments made by the public corporations,
most notably the electricity corporation, which repaid US$15
million of principal ahead of schedule. Traditionally, the external
debt service ratio of the public sector has been low, fluctuating
between 3 and 6 percent of exports of goods and services and 8 and
10 percent of government revenues. These figures remained unchanged
despite the large loans in 1981 and 1982. They were unlikely to
increase because the government had concluded a 1986 refinancing
package with a commercial bank syndicate to lengthen the
amortization schedule of the original hotel corporation loan.
The country's central financial institution was the Central
Bank of the Bahamas. Established in 1974, it was charged with
safeguarding the value of the Bahamian dollar, regulating credit
and note issue, administering exchange control regulations,
managing bank and trust legislation, and compiling financial
statistics. The government's adoption of a code of conduct for the
banking and finance industry in 1985 increased the Central Bank's
supervisory role over that industry. The Central Bank adhered to a
policy of strict discipline to create monetary stability and a
strong balance of payments.
The Bahamian dollar has been kept at par with the United States
dollar since 1973. The Central Bank maintained an informal policy
on interest rates, generally keeping local rates in line with
movements in the United States. In April 1986 the Central Bank
lowered its discount rate to 7.5 percent; commercial banks followed
and cut their prime lending rate to 9 percent. Although the Central
Bank had encouraged commercial banks to lend to productive sectors
of the economy rather than to consumers, banks were reluctant to
adhere to that recommendation. Indeed, the percentage of private
sector loans devoted to personal consumer use increased from 42.4
percent in 1977 to 61 percent in 1984.
In the mid-1980s, the Bahamas generally enjoyed a favorable
balance of payments position. Large negative trade balances were
counteracted by large inflows in the net services account. Despite
these large inflows, however, the current account ran a deficit
from 1981 through 1985. The net capital account registered
surpluses in 1981-82 but went into deficit after 1983-85 in
response to a reduction in public sector inflows following the
completion of the hotel corporation's hotel and casino project. Net
international reserves continually registered surpluses in the
early 1980s; in 1984 especially, net reserves improved
substantially to US$38 million and were expected to register a
US$31 million surplus in 1985 (see table 8, Appendix A).
In the 1980s, the country's major nonpetroleum exports were
pharmaceuticals, chemicals, rum, crawfish, salt, and aragonite.
Major imports, including oil for domestic consumption, were
foodstuffs, tobacco, beverages, machinery and transport equipment,
automobiles, and finished manufactured goods, including furniture,
clothing, footwear, toys, and jewelry. The United States was the
most important trading partner in both exports and imports.
Transportation infrastructure on the islands was good. There
were 3,350 kilometers of roads, of which 1,350 kilometers were
paved and 1,250 were gravel. New Providence and Grand Bahama were
the islands with the most extensive road systems, but good roads
also were found on Cat Island, Long Island, Eleuthera, and on
sections of Andros Island, Great Abaco Island, and Great Exuma
Island. In 1985 there were 67,848 motor vehicles registered, 70
percent of which were concentrated in New Providence. Of the total
number of vehicles, approximately 77 percent were private
automobiles. The urban centers of Nassau and Freeport did not have
major public transportation systems, relying instead on a plentiful
supply of metered taxis; New Providence had a system of small
minibuses known as jitneys. No railroads or inland waterway systems
existed on the islands. Interisland transportation was served by
charter, commercial, and private aircraft. The country had forty-
nine government-run or private airfields, including two
international airports (Nassau and Freeport) and one airfield run
by the United States Air Force (Grand Bahama); nineteen of the
airfields served as official ports of entry. Interisland travel was
also covered by private boats and by a government mailboat system;
approximately twenty mailboats departed Nassau for the Family
Islands each week. The country had twenty-three ports, including
the main harbors at Nassau and Freeport.
For a developing nation, the Bahamas possessed advanced
telecommunications and international communications systems. An
automatic telephone system provided service to 62,000 telephones.
Both Nassau and Freeport had twenty-four-hour international
telephone and telegraph service, whereas the Family Islands were
generally served by only daytime service. The system was aided by
a tropospheric scatter link station in Nassau and a Bahamas-Florida
submarine cable that provided excellent reception and eliminated
problems of atmospheric interference. Radio and television
broadcasting was operated by the Broadcasting Corporation of the
Bahamas. It ran three radio stations; ZNS-1 and ZNS-2 operated from
Nassau, and ZNS-3 operated in Freeport to serve the northern
islands. One color television station, ZNS-13, operated out of
Nassau. It opened officially in 1977 and served an area within a
209-kilometer radius of Nassau.
Data as of November 1987
- Caribbean Islands-Historical Background
- Caribbean Islands-Prosperity and Government Centralization, 1974-81
- Caribbean Islands-Economy
- Caribbean Islands-Agriculture
- Caribbean Islands-Government and Politics
- Caribbean Islands-Tourism
- Caribbean Islands-Political Dynamics
- Caribbean Islands-COUNTRY PROFILE: Turks and Caicos Islands
- Caribbean Islands-Chapter 7 - Strategic and Regional Security Perspectives
- Caribbean Islands-Role of Government
- Caribbean Islands-Labor Force and Industrial Relations
- Caribbean Islands-Role of Government
- Caribbean Islands-Growth and Structure of the Economy
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Economy
- Caribbean Islands-Political Dynamics
- Caribbean Islands-A Regional Security System
- Caribbean Islands-Tourism
- Caribbean Islands-Other Third World Relations
- Caribbean Islands-SOCIAL AND CULTURAL CHARACTERISTICS
- Caribbean Islands-Foreign Relations
- Caribbean Islands-Balance of Payments and Debt
- Caribbean Islands-HEALTH AND WELFARE
- Caribbean Islands-ACKNOWLEDGMENTS
- Caribbean Islands-Role of Government
- Caribbean Islands-FOREIGN RELATIONS
- Caribbean Islands-Education
- Caribbean Islands-Manufacturing
- Caribbean Islands-Relations with the Commonwealth and Others
- Caribbean Islands-Foreign Relations
- Caribbean Islands-COUNTRY PROFILE: St - Christopher and Nevis ST - CHRISTOPHER AND NEVIS
- Caribbean Islands-The Penal System
- Caribbean Islands-The Soviet Presence
- Caribbean Islands-Colonial Heritage HISTORICAL SETTING
- Caribbean Islands-National Security
- Caribbean Islands-COUNTRY PROFILE: Antigua and Barbuda ANTIGUA AND BARBUDA
- Caribbean Islands-The Public Security Forces
- Caribbean Islands-Political Systems
- Caribbean Islands-EDUCATION
- Caribbean Islands-Relations with Latin American and Caribbean Countries
- Caribbean Islands-Changes in the Social Base of Political Power POLITICAL INDEPENDENCE
- Caribbean Islands-POPULATION
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Relations with the United States
- Caribbean Islands-Livestock, Fishing, and Forestry
- Caribbean Islands-National Security
- Caribbean Islands-Population
- Caribbean Islands-Education
- Caribbean Islands-ECONOMY
- Caribbean Islands-Banking and Finance
- Caribbean Islands-Foreign Relations
- Caribbean Islands-Health and Welfare
- Caribbean Islands-Geography
- Caribbean Islands-Population
- Caribbean Islands-NATIONAL SECURITY
- Caribbean Islands-Agricultural Sector
- Caribbean Islands-The Barbados Defence Force
- Caribbean Islands-Government and Politics
- Caribbean Islands-Geography
- Caribbean Islands-Economy
- Caribbean Islands-The Police
- Caribbean Islands-The Robinson Government
- Caribbean Islands-United States Preeminence
- Caribbean Islands-External Sector
- Caribbean Islands-Energy
- Caribbean Islands-Education
- Caribbean Islands-POLITICAL TRADITIONS
- Caribbean Islands-THE STRATEGIC SETTING
- Caribbean Islands-Education
- Caribbean Islands-Role of Government
- Caribbean Islands-Foreign Trade and Balance of Payments
- Caribbean Islands-Geography
- Caribbean Islands-Foreign Trade and Balance of Payments
- Caribbean Islands-Government and Politics
- Caribbean Islands-Livestock, Fishing, and Forestry
- Caribbean Islands-Industrial Sector
- Caribbean Islands-Relations with the Commonwealth and Others
- Caribbean Islands-THE COLONIAL PERIOD
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Relations with Communist Countries
- Caribbean Islands-Role of Government
- Caribbean Islands-GEOGRAPHIC SETTING
- Caribbean Islands-Government and Politics
- Caribbean Islands-Macroeconomic Overview
- Caribbean Islands-Sectoral Performance
- Caribbean Islands-National Security
- Caribbean Islands-Natural Gas
- Caribbean Islands-Geography
- Caribbean Islands-Incidence of Crime
- Caribbean Islands-Economy
- Caribbean Islands-COUNTRY PROFILE: Barbados BARBADOS
- Caribbean Islands-The Road to Independence
- Caribbean Islands-PREFACE
- Caribbean Islands -CHAPTER 3 - TRINIDAD AND TOBAGO
- Caribbean Islands-Services
- Caribbean Islands-National Security
- Caribbean Islands-Foreign Trade and Balance of Payments
- Caribbean Islands-World War II
- Caribbean Islands-External Sector
- Caribbean Islands-EDUCATION
- Caribbean Islands-Foreword
- Caribbean Islands-Health and Welfare
- Caribbean Islands-The Postwar Strategic Vacuum
- Caribbean Islands-Education
- Caribbean Islands-Regional Security Threats, 1970-81
- Caribbean Islands-Controversial Security Issues
- Caribbean Islands-HEALTH AND WELFARE
- Caribbean Islands-Foreign Assistance
- Caribbean Islands-Chapter 4 - The Windward Islands and Barbados
- Caribbean Islands-ECONOMY
- Caribbean Islands-Population
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Foreign Relations
- Caribbean Islands-Foreign Relations
- Caribbean Islands-Banking, Financial Services, and Currency
- Caribbean Islands-HISTORICAL SETTING
- Caribbean Islands-Education SOCIAL AND ECONOMIC DEVELOPMENTS, 1800-1960
- Caribbean Islands-The Post-Williams Era, 1981-86
- Caribbean Islands-The Armed Forces
- Caribbean Islands-Chapter 6 - The Northern Islands
- Caribbean Islands-Relations with the United States
- Caribbean Islands-Sectoral Performance
- Caribbean Islands-Population
- Caribbean Islands-Finance and Banking
- Caribbean Islands-COUNTRY PROFILE: CAYMAN ISLANDS BRITISH DEPENDENCIES: THE CAYMAN ISLANDS AND THE TURKS AND CAICOS ISLANDS
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Services
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Education
- Caribbean Islands-Land Tenure and Use
- Caribbean Islands-COUNTRY PROFILE: MONTSERRAT
- Caribbean Islands-Growth and Structure of the Economy
- Caribbean Islands-Population
- Caribbean Islands-Transportation, Communications, and Electricity
- Caribbean Islands-Health and Welfare
- Caribbean Islands-Government and Politics
- Caribbean Islands-Petroleum and Asphalt
- Caribbean Islands-Economy
- Caribbean Islands-Foreign Relations
- Caribbean Islands-Macroeconomic Overview
- Caribbean Islands-The Pre-European Population HISTORICAL AND CULTURAL SETTING
- Caribbean Islands-Macroeconomic Overview
- Caribbean Islands-National Security
- Caribbean Islands-COUNTRY PROFILE: The Bahamas THE BAHAMAS
- Caribbean Islands-Health and Welfare
- Caribbean Islands
- Caribbean Islands-Crops
- Caribbean Islands-National Income and Public Finance
- Caribbean Islands-COUNTRY PROFILE: Dominica DOMINICA
- Caribbean Islands-National Security
- Caribbean Islands-Population
- Caribbean Islands-Political Dynamics
- Caribbean Islands-Trade and Finance
- Caribbean Islands-Chapter 1 - Regional Overview
- Caribbean Islands-Economy
- Caribbean Islands-Labor Organizations
- Caribbean Islands-Revenues
- Caribbean Islands-THE REGIONAL SECURITY SETTING
- Caribbean Islands-Construction
- Caribbean Islands-Manufacturing
- Caribbean Islands-Agriculture
- Caribbean Islands
- Caribbean Islands-ISLANDS OF THE COMMONWEALTH CARIBBEAN
- Caribbean Islands-Health and Welfare
- Caribbean Islands-Geography
- Caribbean Islands-Political Dynamics
- Caribbean Islands
- Caribbean Islands-Relations with Latin American and Caribbean Countries
- Caribbean Islands-National Security
- Caribbean Islands
- Caribbean Islands-COUNTRY PROFILE: ANGUILLA
- Caribbean Islands-NATIONAL SECURITY
- Caribbean Islands-Economy
- Caribbean Islands-THE EUROPEAN SETTLEMENTS
- Caribbean Islands-Balance of Payments and Debt
- Caribbean Islands-INTRODUCTION
- Caribbean Islands-Foreign Relations
- Caribbean Islands
- Caribbean Islands-Banking and Finance
- Caribbean Islands-Current Strategic Considerations
- Caribbean Islands
- Caribbean Islands-Narcotics Crime
- Caribbean Islands-Economy
- Caribbean Islands-Petrochemicals
- Caribbean Islands-Sectoral Performance
- Caribbean Islands-POPULATION
- Caribbean Islands
- Caribbean Islands-The Post-Emancipation Societies
- Caribbean Islands-The West Indies Federation, 1957-62
- Caribbean Islands-Relations with the United States, Britain, and Canada FOREIGN RELATIONS
- Caribbean Islands-Sectoral Performance
- Caribbean Islands-Health and Welfare
- Caribbean Islands-Geography
- Caribbean Islands-Crops
- Caribbean Islands-National Income and Public Finance
- Caribbean Islands-Sectoral Performance
- Caribbean Islands-Precursors of Independence
- Caribbean Islands
- Caribbean Islands-Education
- Caribbean Islands-The Criminal Justice System
- Caribbean Islands-GEOGRAPHY
- Caribbean Islands-Role of Government
- Caribbean Islands-Banking and Finance
- Caribbean Islands-Economic Policy and Management
- Caribbean Islands-Foreign Trade and Balance of Payments
- Caribbean Islands-Political Unrest and Economic Troubles, 1970-73
- Caribbean Islands-Education
- Caribbean Islands-Labor Force and Industrial Relations
- Caribbean Islands-Chapter 5 - The Leeward Islands
- Caribbean Islands -Chapter 2 - Jamaica
- Caribbean Islands-Health and Welfare
- Caribbean Islands-The Governmental System GOVERNMENT AND POLITICS
- Caribbean Islands-The Sugar Revolutions and Slavery
- Caribbean Islands-Macroeconomic Overview
- Caribbean Islands-The Cuban Presence
- Caribbean Islands-Geography
- Caribbean Islands-Population
- Caribbean Islands-Land Tenure and Use
- Caribbean Islands-Macroeconomic Overview
- Caribbean Islands-Role of Government
- Caribbean Islands
- Caribbean Islands-Government and Politics
- Caribbean Islands-The Governmental System GOVERNMENT AND POLITICS
- Caribbean Islands-Economy
- Caribbean Islands-Industry
- Caribbean Islands
- Caribbean Islands-The Increased Role of the United States
- Caribbean Islands-Population
- Caribbean Islands-Health and Welfare
- Caribbean Islands-Transportation and Communications
- Caribbean Islands-Country profile: Grenada GRENADA
- Caribbean Islands-Iron and Steel
- Caribbean Islands-Geography
- Caribbean Islands
- Caribbean Islands-Banking and Finance
- Caribbean Islands-Postwar Federation Efforts
- Caribbean Islands-Health and Welfare
- Caribbean Islands-Government and Politics
- Caribbean Islands
- Caribbean Islands-Population
- Caribbean Islands-GEOGRAPHY
- Caribbean Islands-Industry
- Caribbean Islands-Consolidation and Economic Hardship, 1962-69
- Caribbean Islands-Patterns of Development
- Caribbean Islands-Geography
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