The Government announced further adjustments in the Exchange Control regime of the country yesterday stating that the move is in keeping with its commitment to achieving a gradual yet meaningful liberalisation in that area of the financial services sector.
The adjustments, which will be administered by the Central Bank will focus almost exclusively on the relaxation of certain capital account restrictions with specific objectives to provide enhanced opportunities for residents to participate in and finance investments overseas.
The Central Bank has for sometime been in compliance with the International Monetary Fund’s mandate to liberalize exchange control thus the adjustments will address several of the recommendations in The Bahamas Stock Exchange Committee’s Report to the Government on measures to deepen domestic capital markets.
A groundbreaking element of the new arrangement is the accommodation given to the diversification needs of the National Insurance Board. NIB has been granted a maximum of $25 million annually for foreign investments at the official rate of exchange. Plans have already been structured by the Central Bank in conjunction with NIB officials.
In a report issued by the Ministry of Finance (MOF), it states that with immediate effect, the current bid and offer investments are halved by 12.5 percent and 10 percent respectively. However, existing investors should they desire, will be allowed by March 31, 2006 to liquidate their original capital investments at the old offer rate of 20 percent.
In the area of real estate investments, residents may now invest up to $25,000 per family unit, once every 10 years at the official rate to purchase time-shares abroad. This will accommodate the growing interest of Bahamians in this area and codify certain observed practices as it regards to financing of time-shares.
To allow Bahamian employees of foreign owned institutions in The Bahamas to take further advantage of opportunities arising from their employment, the investment limit in contributory employee stock option/share purchase plans has increased from $10,000 per year to $25,000ﾗthrough the offcial market.
Provision has also been made to facilitate the changing requirements observed over time for emigration. Bahamians (From Page 1)
taking up permanent residency abroad may now transfer out the foreign currency equivalent of $250,000 per annum, at the official rateﾗwhich is an increase over the previous $125,000 limit.
The report notes that this round of liberalization provides several measures aimed at affording residents the opportunity to participate to a greater extent in overseas investment opportunities and at the same time provide support to domestic capital markets.
As a means of continually promoting the domestic capital markets and realising the important connection this group has with the domestic economy, a list of eligible investors in domestic securities has been expanded to include temporary residents, permanent residents (with restricted right to work), and certain entities designated resident for Exchange Control purposes.
To create more realistic changes in cost structures over time, temporary residents may now borrow up to $50,000 for consumer loans which is an increase from $15,000. Further, temporary residents who have resided and worked in The Bahamas for at least three years, may now borrow up to B$200,000 to finance owner occupied dwellings disposing of the need for a case by case consideration of requests.
According to the MOF report, the Regional Cross Border Listing has been identified as an important avenue for deepening economic relationships with Caricom, providing Bahamian companies with an opportunity to embrace foreign capital markets and affording Bahamian investors with additional opportunities to diversify investment activities and to hold foreign assets.
For example, Bahamian companies listed on BISX may now list equity securities on principal Caricom exchanges (i.e. Barbados, Jamaica, ECU and Trinidad & Tobago), subject to a limit of 10 percent of issued and outstanding voting share capital, up to a maximum of $20 million per annum.
Also, foreign companies listed on principal Caricom exchanges may now list issued and outstanding equity securities on BISX so that the cost value of net capital (purchases less sales) invested by Bahamians does not exceed $5.0 million per quarter and a maximum of $20 million per annum.
BISX is presently establishing the operational mechanisms and policies to govern cross listing and trading within these parameters, and expects to be completed within the year.
By LISA S. KING, Freeport News Reporter
