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Gov’t ‘disagrees’ on IMF’s ‘top 10%’ income taxation

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Government “disagrees” with the IMF’s assertion that it must introduce a personal income tax targeting “the top 10 percent of earners” and other reforms to hit its 25 percent revenue-to-GDP goal.

Simon Wilson, the Ministry of Finance’s financial secretary, told Tribune Business last night that the Davis administration believes there is sufficient “buoyancy” in the current tax system to achieve its revenue ratio ambitions. This came as the International Monetary Fund (IMF) called for changes that would generate revenue increases equal to 3.7 percent of economic output by 2027-2028.

The Washington D.C-based Fund, in its full Article IV report on The Bahamas that was released on Friday, urged this nation to exploit the G-20/OECD drive for a 15 percent minimum global corporate tax to craft and implement such a tax to suit this nation’s own needs.

t 'VOE 8PO U IJU SFWFOVF UBSHFU FOE EFmDJUT XJUIPVU t *O DBMM GPS DBQJUBM HBJOT EJWJEFOE JOUFSFTU MFWZ t "OE TVHHFTUT SBJTJOH 7"5 UP BT BMUFSOBUJWF And, besides imposing a personal income tax on the highest 10 percent of income earners, the IMF called for such a reform to be accompanied by a 5 percent levy on capital gains, dividends and interest income. It also suggested that the marginal personal income tax rate equal that of the corporate tax to prevent companies avoiding the latter by paying our profits as salaries to shareholders and top executives.

Combined with removing the $60,000 real property tax cap for owner-occupied residences and increasing the rates for “higher value” SIMON homes, as well as WILSON “eliminating tax expenditures” on gambling which does not attract 10 percent VAT, the Fund suggested this reform package could generate extra government revenue equal to 3.7 percent of GDP - almost $540m based on today’s figures - in four years’ time.

The Davis administration has already set a target for government revenues to equal 25 percent of GDP, or economic output, by the 2025-2026 fiscal year. However, the IMF implied that without the reform package it has outlined, The Bahamas will never achieve that goal as it unveiled projections showing this

SEE PAGE B4

Bahamas cool over IMF interest rate rise nudge

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Bahamas has reacted coolly to persistent nudging from the International Monetary Fund (IMF) that it should raise short-term interest rates to narrow the gap with those in the US. The Fund, unveiling its full Article IV report on The Bahamas late on Friday night, suggested “there is scope to raise interest rates without major harm to credit growth or the economic recovery” in The Bahamas should the foreign currency reserves supporting the one:one peg between the Bahamian

and US dollars come under pressure.

The report reaffirms that the IMF has been suggesting that The Bahamas allow domestic interest rates to rise in line with the US Federal Reserve’s monetary tightening to combat inflation, but the Central Bank has maintained its discount rate at 4 percent and given no indication it plans to change its long-standing “accommodative” monetary policy stance any time soon.

“The recovery in tourism, external public sector borrowing and the presence of long- standing capital flow management measures have supported

SEE PAGE B9

Businesses wait over two months for bank account

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net BAHAMIAN businesses face an average wait of more than two months to open a bank account with almost 80 percent asserting that the process “took longer than expected”.

The Central Bank, unveiling the results of a survey of 402 companies and entrepreneurs, said that based on the responses just one-third of business bank accounts were opened within two weeks or less of the application being made.

It added that just 11 percent of accounts were opened on the same day,

with another 12 percent occurring within one week, meaning that fewer than one in four applications were processed within seven days. Around 40 percent “took more than one month in absolute time” to be opened, with 33 percent of applications taking longer than one month but less than six to be approved.

Around 6 percent of all corporate bank account opening applications were still actively awaiting decisions after more than six months”, while about 3 percent were terminated after the applicants withdrew their requests.

SEE PAGE B6

SANDALS ROYAL BAHAMIAN

Sandals insulated from Stewart family’s battle

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Sandals resort chain’s governance and management will not be impacted if the trustee overseeing its late founder’s estate and a $334m cash pile are removed, the Chief Justice has ruled.

Sir Ian Winder, in a June 22, 2023, verdict in favour of Cheryl HammersmithStewart, third wife of Gordon ‘Butch’ Stewart, found that even if Cromwell Trust Company was stripped of its duties this

would not overturn “decision-making power” for Sandals. This is because its founder has carefully ensured this remains with a separate ‘Advisory Board’ headed by his son and successor, Adam.

He reached this conclusion in finding that Mrs Hammersmith-Stewart had not triggered a clause in the deeds governing the trust structure established by her late husband, which could have removed her as a beneficiary and prevented her from receiving any assets,

SEE PAGE B8

PAGE 2, Monday, February 5, 2024

THE TRIBUNE

Gov’t deserves fiscal praise but should now look to IMF

By BRIAN SEEL

T

he Bahamas is now three years into a recovery from the devastating effects of Hurricane Dorian and the COVID-19 pandemic, which hit the country only four months apart in 20192020 and wreaked havoc on the economy. Real gross domestic product (GDP) fell by 24 percent in 2020 alone, while the debt burden skyrocketed from 60 percent of GDP just before the crisis to 100 percent at its peak in 2021.

Bad luck is partially to blame for The Bahamas’ fiscal issues. Hurricane Dorian was one of the most severe storms on record, and no government accurately predicted the timing and scope of the pandemic.

Their combined impact required an immediate fiscal response, even as The Bahamas’ tourism-dependent economy came to a halt and government revenues collapsed. A deterioration in debt sustainability was understandable - even unavoidable - although the costs to macroeconomic stability were high.

The twin crises put tremendous pressure on the Government’s finances.

At times, it even appeared as though it would default on its debt. Thankfully, aggressive action by Prime Minister Philip Davis and his team prevented that outcome, and over the past several years the fiscal outlook has improved significantly.

The Budget deficit shrank from a peak of 13 percent of GDP in 2021 to under 4 percent in 2023, and the debt stock fell over 15 percentage points to an estimated 84 percent of GDP at the end of 2023.

The Government deserves praise for stabilising its finances under difficult circumstances - it was no small feat. However, it should do more to ensure that recent gains translate to permanent fiscal sustainability, and it should increase its efforts towards building buffers against future unexpected shocks.

It should also consider an International Monetary Fund (IMF) programme, which would help on both fronts and significantly lower its borrowing cost.

Towards fiscal resilience

On the fiscal side, the main challenge for the Government going forward will be to avoid complacency.

For example, while the Budget has an ambitious 0.9 percent of GDP deficit target for the current fiscal year ending in June 2024, the deficit was already running around 0.8 percent of GDP as of October 2023 according to the latest data available, only a third of the way through the fiscal year. On that trajectory, a 2.4 percent of GDP deficit looks more likely - a miss of about 1.5 percent of GDP. While that would still be a major improvement relative to the prior fiscal year, a missed deficit target could expose the Government to claims it is wavering on its fiscal commitments. If the numbers do not improve quickly, it should introduce new fiscal measures, especially on the expenditure side, and take care to present more realistic targets in the future.

Another option would be to consider an IMF programme. While this will undoubtedly prove controversial given the Government’s prior

reluctance to engage with the IMF, the financial benefits would be immediate and substantial.

Take The Bahamas’ Caribbean neighbours, Jamaica and Barbados, for instance.

Jamaica’s debt stock was estimated at about 72 percent of GDP at end-2023, only slightly less than The Bahamas, yet its borrowing cost in international markets is about 3 percentage points lower. Barbados, on the other hand, had an estimated debt-to-GDP ratio of 115 percent of GDP, much worse than The Bahamas, yet its borrowing cost is still a full percentage point lower.

What is the difference?

While both countries did have slightly better fiscal balances last year, the major driver of The Bahamas’ higher cost of financing is the lack of an IMF programme.

Importantly, the IMF offers several types of programmes, and not all of them come with onerous D.C-directed conditionality. A Policy Coordination Instrument (PCI), for instance, does not offer direct financing but would

leverage IMF technical assistance and help the Government signal a strong reform commitment to markets via a largely home-grown programme.

A PCI may also enable The Bahamas to tap the IMF’s Resilience and Sustainability Facility, which offers cheap financing to mitigate risks related to climate change - something The Bahamas badly needs.

Access to cheap financing would free up cash currently being spent on interest for other items, such as social spending, infrastructure or building up a rainy-day fund. An extra benefit of an IMF programme, even an unfunded one, would be the likely significant reduction in commercial borrowing rates.

The Davis administration has already taken some steps in this direction through its work with the Inter-American Development Bank (IDB), which recently provided a partial guarantee for commercial borrowing. Signing on to an IMF programme would be a logical extension of these efforts as the Government would receive interest relief

in exchange for reforms it intends to implement anyway. Far from suggesting weakness, it would imply savvy on the part of the Government, as well as signal a strong commitment to reforms that will pay dividends for generations of Bahamians to come.

NB: Brian Seel is a senior sovereign analyst with the Artisan Partners EMsights Capital Group in Boston.

His team invests in government debt around the world, including in The Bahamas.

Share your news The Tribune wants to hear from people who are making news in their neighbourhoods.

Perhaps you are raising funds for a good cause, campaigning for improvements in the area or have won an award. If so, call us on 322-1986 and share your story.

THE TRIBUNE

Monday, February 5, 2024, PAGE 3

HOTEL INDUSTRIAL DEAL ‘IN NEED OF A MIRACLE’

By FAY SIMMONS Tribune Business Reporter jsimmons@tribunemedia.net THE Government’s labour director yesterday said “it’s becoming obvious there now needs to be a miracle” to secure an industrial agreement for the hotel industry after Friday’s talks ended in “stalemate”.

Howard Thompson, in a messaged reply to Tribune Business inquiries, said that as “an eternal optimist” he remains hopeful a breakthrough may yet occur to prevent industrial action from disrupting the country’s largest industry after hotel employers promised to “crunch the numbers” over the weekend and see if they could meet the union’s “very slightly reduced” demands.

He added that following four hours of negotiations, which would have ended around 9pm on Friday night, no agreement or deal had been reached even though the Bahamas Hotel and Restaurant Employers Association had provided a “counteroffer” to Bahamas Hotel, Catering and Allied Workers Union (BHCAWU) representatives.

The Association, according to Mr Thompson, is due to present the results of its “number crunching” and whether it can meet the union’s position by 12pm today. He said: “After four hours of intense and oftentimes spirited negotiations between the executives of the hotel owner association and the executives of the hotel union, the night ended in a stalemate.

“No deal. No agreement.

Notwithstanding the hotel owners association’s counter-offer on the increase on the base salary and increase on the lump sum. My mediation team, which includes Ministry of Labour’s external counsel, Keenan Johnson, Father Palacious and veteran unionist, Bernard Evans, were exhausted

HERBERT THOMPSON and a bit deflated at the end of the night when we reported back to minister Pia Glover-Rolle.

“I did state a couple days before Friday’s negotiations that we were operating ‘on faith’, but now it’s becoming obvious that there now needs to be a miracle.”

Mr Thompson declined to reveal specifics on the Association’s counter-proposal, and what it is offering union members on base pay and a lump sum payment, or what modifications the union has made to its demands.

However, he added: “The night ended on a slight positive note where the executives of the hotel owner’s association asked for more time to go back and speak with their accountants to ‘crunch the numbers’ and see if they could possibly agree to the union’s very slightly reduced position on base salary increase across the board.

“We expect to hear back from them before 12pm Monday on that. So fingers crossed. I am the eternal

optimist and so therefore I remain hopeful, and I’ve been in contact with both the president of the hotel owner’s association (Russell Miller) and the president of the hotel union (Darrin Woods) [on Saturday] to discuss matters in more detail.

“If capital truly understands labour and labour truly understand capital, the new offer should break the impasse immediately but as I alluded to...it’s going to take a ‘miracle’ and I do believe in miracles.” Mr Woods could not be reached for comment before press time last night.

Members of the 5,000strong hotel union were last week said to have heldoff on plans to go on ‘work to rule’ as the first step in escalating industrial action in a bid to provide time for more negotiations to complete the industry’s first industrial agreement for more than a decade.

Mr Woods last week complained that the Association was sticking to its previously stated position, which is that tipped workers and other minimum wage staff will not necessarily receive the 8 percent “across-the-board” salary increase the BHCAWU wants for all members.

Its stance is that such workers, who mainly gain the bulk of their income from guest tips, should receive “whichever is greater” - last year’s minimum wage increase or an 8 percent pay rise, but not

both - when it comes to their base salary.

This would mean that if a hotel worker’s base pay increased by more than 8 percent due to the Government raising the minimum wage last year, they would not be entitled to a further rise under the new industrial agreement.

And he alleged that the Association had also revised its position such that its members want to deduct the 3 percent pay increase they gave voluntarily to non-tipped staff last year from that 8 percent, thus cutting their pay rise to 5 percent. The four unionised properties involved are Atlantis, the Ocean Club,

Lyford Cay Club and Town Hotel.

Mr Miller, the senior Atlantis executive and Bahamas Hotel and Restaurant Employers Association president, previously said in a statement that both sides had “agreed to all financial and non-financial terms” for the industrial agreement and the impasse was ‘unexpected’.

He said: “Both sides had already agreed to all financial and non-financial terms and conditions in the new agreement, and we were in the process of vetting and binding documents for signature. This unexpected, 11th-hour impasse is incredibly unfair to our

bargaining unit team members who have worked without an agreement since 2013 due to the union’s failure to put a new contract forward.

“We have continued to honour and operate under the terms of the expired agreement without fail.

We will not allow today to derail our commitment to finalising a new agreement as soon as possible.” The reference to the “union’s failure” refers to the fact it did not submit an offer for a new industrial deal 90 days or more before the last agreement’s expiry in 2013 as the contract mandated it must do.”

PAGE 4, Monday, February 5, 2024

THE TRIBUNE

Gov’t ‘disagrees’ on IMF’s ‘top 10%’ income taxation FROM PAGE B1 ratio would remain stubbornly just below 22 percent through 2032-2033.

And, as a result, the IMF also forecasts that the Government will fail to achieve its objective of eliminating the fiscal deficit from 20242025 onwards - a year in which it currently projects a $109.2m Budget surplus.

Instead, in the absence of any adjustments, it is predicting that The Bahamas will continue to run deficits - albeit declining slightly every year to less than 1 percent of GDP - through 2032-2033.

The IMF acknowledged that implementing corporate and personal income tax regimes could be a hard sell in The Bahamas, given that there is no history of such taxation and its implementation would require “significant investment” in training personnel as well as technology to administer such systems.

Should this prove “infeasible”, the IMF suggested The Bahamas raise the VAT rate to 15 percent - a 50 percent increase in percentage terms - as an alternative although it admitted such a move would deepen the regressive taxation where lower income persons give proportionally more of their income to taxes than their wealthier counterparts.

“Tax and expenditure reforms would improve the progressivity of the fiscal system and reinforce debt

sustainability. The implementation of the OECD global minimum corporate tax increases the urgency of introducing a well-designed corporate income tax and there is scope to increase the progressivity and efficiency of the tax system,” the IMF’s Article IV report said.

Outlining what Bahamian tax reform should look like, it argued: “Introduce a corporate income tax. Replacing the Business Licence fee with a 15 percent tax on corporate profits for large corporations could raise an additional 1.4 percent of GDP and would be compatible with the OECD’s global minimum tax rules.

“Designing the profits tax as a cash flow tax that allows full expensing of investment, and includes an unlimited carryover of losses, would simplify implementation and prevent disincentivising business investment.

A lower tax rate could be provided for SMEs (small and medium-sized businesses) instead of retaining the Business Licence fee for small entities.”

Much, if not all, of this was included for consideration in the Government’s corporate income tax ‘green paper’ that required companies, industries and others to provide feedback by end-August 2023.

It suggested that, in the majority of cases, a corporate income tax would

replace the existing Business Licence regime to as to avoid double taxation.

Meanwhile, the IMF’s Article IV report called for corporate income tax to be accompanied by the personal variety but only for senior management executives and those in high-earning positions.

“The personal income tax would have high standard deduction so as to impact only the top 10 percent of earners and would be accompanied by a 5 percent tax on capital gains, dividends and interest income,” the IMF said.

“Setting the marginal personal income tax rate equal to that of the corporate income tax rate would help reduce avoidance through the recharacterisation of profits as labour income and would raise around 2 percent of GDP annually.”

Between corporate and personal income tax, the IMF is forecasting that The Bahamas could raise extra revenue equal to a combined 3.4 percent of GDP - equivalent to just over $495m at today’s economic output. This, it predicts, will enable the Government to both beat its 25 percent revenue-to-GDP target and eliminate the fiscal deficit with a sustainable Budget surplus from 2026-2027 onwards.

Mr Wilson, though, last night reaffirmed that the Government is not eyeing the implementation of

personal income tax in any form. And he reiterated its continued belief that expanding economic activity, combined with better administration and compliance/enforcement, will generate ever-increasing revenue yields to make the IMF’s reform package unnecessary.

“That’s their view. That’s not our own view,” the financial secretary added of the IMF. “I think the mid-year Budget will demonstrate that it’s not necessary to get us to the 25 percent revenue-toGDP ratio. We believe the current tax system has the buoyancy, better compliance to get us to 25 percent or more.

“We’ve been pretty successful so far but there’s more work to be done. We think the current tax system with real property tax, VAT and Business Licence fees, the work we’ve done in those areas, will demonstrate there’s more. They’re [the IMF] saying that but we don’t think so. We disagree. The Government has made it very clear it’s not at this time considering personal income tax.”

Tribune Business sources have recently suggested that the Government may announce plans for the introduction of a 15 percent corporate income tax, but only on those entities that meet the qualifying G-20/OECD criteria as part of multinational groups with annual turnovers of 750m euros or more, in the upcoming 2024-2025 Budget that will be unveiled during the last week of May. Mr Wilson did not confirm this, but said the Government will likely make a corporate income tax-related announcement in the mid-year Budget due by the end of this month as “we’ll have a much better idea of what shape or form” such a levy may look like then. He added that designing and structuring a corporate income tax system for The Bahamas may now only be 12-18 months away.

“We are progressing quite well, quite well,” he told this newspaper.

“During the mid-year Budget we are likely to make an announcement.

We still have to do some more work, but we believe that certainly by the midyear Budget, which is due by the end of February, we’ll have a much better idea of what shape or form this will take.”

Asked how far away corporate income tax implementation may be, Mr Wilson replied: “Any corporate income tax will be building on the Business Licence regime, so it’s not two to three years [away]; it’s maybe 12-18 months.

Whatever we do, it has to be done to meet out international obligations.” The Bahamas is among 138 countries already signed on to comply with the G-20/ OECD minimum corporate tax initiative.

“There is scope to increase revenues from other sources should the proposed fiscal measures prove difficult to implement or macroeconomic conditions worsen and widen the fiscal deficit,” the IMF said.

“The introduction of corporate and personal income tax regimes would require broad public support as well as a significant investment to build human and technological capacity to administer the taxes.

“In the event that introducing a corporate and personal income tax proves infeasible, the Government could introduce excise taxes on energy to reduce emissions or raise the VAT rate to 15 percent, in line with regional peers.

“However, further increases in indirect taxes would be regressive and would need to be partially compensated with an increase in social transfers for the poor. Should economic activity slow faster than expected, the proposed tax reform could prioritise less pro-cyclical measures while the authorities could phase-in or delay the increase in expenditure

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measures until revenues recover.”

Elsewhere, the IMF suggested its deficit and fiscal forecasts for the current Budget year are “more realistic” than the Government’s even though the latter is sticking to its $131.1m deficit target that is equivalent to 0.9 percent of GDP. The Davis administration is ultimately targeting a deficit equal to 2.1 percent by 2026-2027, with measures including “revaluing real estate in the Family Islands for property tax”.

“Assuming more realistic revenue forecasts, the fiscal deficit is likely to be closer to 2.6 percent of GDP in 2023-2024,” the IMF reiterated. Over the medium-term, central government debt would fall to 80 percent of GDP by 20262027 and gross financing needs would remain high at around 20 percent of GDP for the next several years.

“Even though, under this path, debt is judged to be sustainable, a faster reduction in debt would lessen the risk of sovereign stress, lower the interest burden and reduce the current account deficit.” The Government is also aiming to find extra capital spending from repurposing fixedcost recurrent expenditure equal to 0.5 percent of GDP despite an aging population.

In response, the Government said it plans to “to launch a strategic review of the tax framework in 2024”. The IMF added: “They believe that their deficit target of 0.9 percent of GDP for 2023-2024 is attainable with existing taxes, improved compliance in VAT and property taxes.

“New taxes such as the hotel condominium tax and the tourism environmental tax, in addition to the recent changes to existing taxes, including extending the Business Licence fee to exempt companies, higher cap on real property taxes, are also expected to bolster revenues.

“Furthermore, additional streamlining of tax expenditures and impending adjustments to large multinational corporations’ taxation in the context of the OECD Pillar II should generate additional medium-term revenues as a percentage of GDP.”

THE TRIBUNE

Monday, February 5, 2024, PAGE 5

Good start

By CHRIS ILLING CCO @ ActivTrades.com

S

trong big-tech balance sheets lifted Wall Street into positive territory at the end of last week. However, disappointment over the latest US labour market report limited gains. The Dow Jones Industrial Average of blue-chip stocks was trading slightly lower at 38,647 points shortly after opening on Friday. The broader S&P 500 gained 0.4 percent to 4,954 points, while The Nasdaq technology exchange index rose by just under one percent to 17,632 points.

A strong report from the US Department of Labor, however, slowed down the rally. In January, 353,000 new jobs were added outside of agriculture. Analysts had expected 180,000. This dampened speculation of

an imminent interest rate hike by the US Federal Reserve, which is trying to keep inflation in check with a tight monetary policy and cool down the hot joba market. The separatelycalculated unemployment rate remained at the previous month’s level of 3.7 percent in January. Here, too, experts were caught on the wrong foot, as they had expected an increase to 3.8 percent.

The big winner after the earnings report release was, once more, Mark Zuckerberg. Meta jumped by about 20 percent and was more expensive than ever at around $477. Amazon’s

shares climbed by a good 7 percent. Total revenue at Meta rose by 25 percent in the fourth quarter when compared to the same period last year, growing from $32.2bn to $40.1bn, with the company issuing its first-ever dividend. The Meta chief executive told investors via a webcast about his vision for the company. “We invested heavily both in AI and the Metaverse for a long time, and will continue to do so,” said Mr Zuckerberg. “I still expect this next generation of AR, VR and MR computing platforms to deliver a realistic sense of presence

that will be the foundation of social experiences.”

Another ‘Big Seven’ company also experienced a most welcome jump in its share price on Friday last week. Amazon’s shares climbed by almost 8 percent and traded at about $172. Amazon exceeded market expectations across the board with its fourth quarter 2023 and full-year figures, reporting earnings per share of $1

while analysts had expected $0.78. Net sales also exceeded analyst estimates, coming in at $169.96bn compared to the expected $166.21bn.

Additionally, the important cloud revenue increased by 13 percent during the reporting period.

In Europe, the two large car manufacturers drove in higher share prices. In the automotive sector, a surprisingly high inflow of funds at Mercedes-Benz

lifted investor sentiment.

Shares gained 2 percent.

In the wake of this, Porsche’s shares rose by 4.2 percent to the top of the German index (DAX).

With its profit participation and a payout ratio of 40 percent, Mercedes has been considered one of the best dividend stocks in the Dax for years.

The savvy investor is off to a good start into 2024.

PAGE 6, Monday, February 5, 2024

THE TRIBUNE

BUSINESSES WAIT OVER TWO MONTHS FOR BANK ACCOUNT FROM PAGE B1 “Indications are that averaging over all of the time intervals used for responses, taking the midpoint of each time band as the average for the range, the average wait time to get an account opened was over two months,” the Central Bank’s survey report said.

“In particular, only onethird of accounts were opened within two weeks or less. Within this subset, only about 11 percent of account openings were concluded in the same day, while almost the same fraction opened within one week. On the other hand, about 40 percent of accounts, in absolute time, took more than one month to be opened....

“There was a higher level of dissatisfaction than satisfaction with the process, seemingly related to

the average time it took to complete the process and influenced by respondents’ views of the importance of the due diligence documentation requested from the banks.”

As for the private sector’s assessment of the customer service provided by the Bahamian commercial banking industry, the Central Bank survey findings said just 10 percent reported being “very satisfied” with the time taken to open the account, the overall service and the bank’s responsiveness. This rose to 20 percent for the account opening time when those who are “satisfied” were included.

“The survey also indicated that roughly fourfifths of respondents either agreed or strongly agreed that it took longer than expected to successfully

open an account,” the Central Bank said.

“A greater fraction of respondents expressed dissatisfaction, compared to some level of satisfaction in the identified aspects of the account opening process, whereas between 15 percent to 25 percent of survey participants had a neutral perception of the process.

“In particular, just over one-fourth of individuals felt some degree of satisfaction with the length of time it took to open accounts, as compared to almost twothirds who were dissatisfied to some degree. In addition, almost one-third of respondents were satisfied with the level of responsiveness shown by the banks, as compared to about 45 percent who were not satisfied,” the industry regulator added.

“In regards to the overall customer service experience, 31 percent were satisfied or somewhat satisfied with the overall service experience, compared to 45 percent who expressed some degree of dissatisfaction.”

The Central Bank said the results had “highlighted some key areas that can be improved in the service levels offered by banks and the ease of opening business accounts”, adding that its push for a risk-based approach when it came to commercial banks conducting Know Your Customer (KYC) due diligence on new clients “should help ease the burden”.

“The Central Bank will therefore target improved outcomes in this space, including streamlined customer due diligence for micro and small businesses

that are more closely aligned with the applicable guidance for establishing relationships with individuals,” the regulator added.

“Outside of the improved application of risk-based customer due diligence, the Central Bank will also pursue and promote the implementation of more effective systems for frontline staff within financial institutions. This is to ensure that anti-money laundering and counter terror financing standards are, in practice, consistently deployed by front-line staff as intended in regulatory guidance and the internal policies and procedures of financial institutions.

“The Central Bank also proposes to require that financial institutions develop systems to monitor and actively target, through training and other

interventions, outcomes to favourably impact the account opening process.”

The Central Bank added that there were “mixed results” regarding the private sector’s awareness of KYC documents that were requested by commercial banks as opposed to the justification for needing them.

“Approximately two-thirds of survey participants were in some level of agreement that the banks were clear on what documentation was needed to complete the account opening process,” it said.

“However, only about 30 percent of firms felt that the banks explained why documentation was required.

Further, an almost equal proportion agreed on some level that they were able to provide all of the required documents at once versus almost 30 percent that were not able to submit all of the documents at once.”

THE TRIBUNE

Monday, February 5, 2024, PAGE 7

NOTICE INTERNATIONAL BUSINESS COMPANIES ACT, 2000

BLUE ALPS FUND LIMITED (IN VOLUNTARY LIQUIDATION) NOTICE IS HEREBY GIVEN that in accordance with section 138(6) of the International Business Companies Act, 2000, as amended, the winding up and dissolution of BLUE ALPS FUND LIMITED is complete.

L. Michael Dean Sole Liquidator Address: Equity Trust House Caves Village West Bay Street P O Box N-10697 Nassau, Bahamas

LEGAL NOTICE

NOTICE International Business Companies Act (No. 45 of 2000) In Voluntary Liquidation Notice is hereby given that, in accordance with Section 138 (4) of the International Business Companies Act, (No.45 of2000), DAMIMI HOLDINGS LTD. (the “Company”) is in dissolution.

The date of commencement of the dissolution is 30th January, 2024.

Berenice Carrasquedo Lopez, is the Liquidator and can be contacted at of Paseo de la Palma 102E, Lomas de Vista Hermosa, Mexico DF, Cuajimalpa de Morelos, 05100, Mexico.

All persons having claims against the above-named Company are required to send their names, addresses and particulars of their debts or claims to the Liquidator before 2nd March, 2024.

NOTICE

PRASEL LTD. Incorporated under the International Business Companies Act, 2000 of the Commonwealth of The Bahamas.

Registration Number 205544 B (In Voluntary Liquidation) Notice is hereby given that the above-named Company is in dissolution, commencing on the 1st day of February A.D. 2024.

Articles of Dissolution have been duly registered by the Registrar. The Liquidator is Mr. Jonny Ricardo Prasel, whose address is Rua Jornalista Jose A. Gumy, 110, CEP: 80330-230, Curitiba, Brazil. Any Persons having a Claim against the above-named Company are required on or before the 1st day of March A.D. 2024 to send their names, addresses and particulars of their debts or claims to the Liquidator of the Company, or in default thereof they may be excluded from the benefit of any distribution made before such claim is proved.

Dated this 1st day of February A.D. 2024.

Jonny Ricardo Prasel Liquidator

Share your news

The Tribune wants to hear from people who are making news in their neighbourhoods. Perhaps you are raising funds for a good cause, campaigning for improvements in the area or have won an award. If so, call us on 322-1986 and share your story.

PAGE 8, Monday, February 5, 2024

THE TRIBUNE

Sandals insulated from Stewart family’s battle FROM PAGE B1 by launching her legal claim.

Sir Ian’s verdict is part of a series of judgments just released by the Supreme Court which lay bare the extent of the battle over the late Mr Stewart’s estate and the divisions it has caused in his family, as well as the lengths several members went to in a bid to keep the dispute from becoming public on the grounds it could damage the Sandals business and threaten their lives.

Tribune Business previously revealed the dispute’s existence after obtaining a heavily blacked-out May 30, 2022, ruling by then-senior justice Indra Charles. That verdict, along with her rejection of an attempt to appeal it as well as Sir Ian’s latest decision, have all now just been made public without any explanation as to why they have been disclosed now.

However, their publication follows extensive efforts by both Cromwell, a private trust company created specifically to manage the trusts created by the late Mr Stewart, and several of his children to keep the dispute and their affairs private by persuading the Supreme Court to “seal” the file.

Had the court agreed this would have kept all legal filings and material related to the battle off-limits the public, and only accessible to the parties and judicial staff. Adam Stewart, Mr Stewart’s son and successor as Sandals Resorts International’s current executive chairman, together with his sister, Jaime McConnell, and brother, Brian Jardim, had joined Cromwell in seeking to have the file sealed.

Brian Simms KC, the senior Lennox Paton partner representing Cromwell, and Sean McWeeney KC, the Graham, Thompson & Co attorney and partner acting for Adam Stewart and his siblings, both argued that the late Mr Stewart’s desire to keep Sandals’ “sensitive commercial information” confidential should be respected because the resort chain is a private company.

The duo argued that disclosure would have a “negative impact” on Sandals’ business affairs, with then-senior justice Charles writing in her verdict: “They contended that a hearing in open court would lead to Sandals’ customers and competitors becoming aware of the level of profit made by Sandals, which would in turn lead to those customers effectively squeezing the profit margins of Sandals, damaging the value of the trust assets.”

Justice Charles, in her now non-redacted May 30, 2022, verdict, rejected this argument by the trustee and Adam Stewart and his siblings, adding that “the effects on the trusts and businesses asserted.... are no more than inconveniences”.

And she also dismissed arguments that the lives and safety of the late Mr Stewart’s grandchildren would be put in danger if their wealth, and Sandals’ earnings, became public.

Mr Simms had argued that given “the value of the trust assets and the popularity of Sandals, the perceived wealth poses a substantial threat to their safety”.

He referred to affidavit evidence from Cromwell asserting that the trustees “have concerns regarding all of the beneficiaries, but that safety concerns for those in Jamaica are exacerbated by the danger there”.

Kidnapping for ransom has become an increasing concern in Jamaica, and Justice Charles noted: “Mr Simms KC also relied on the evidence of Jamie, the mother of some of the minor children in Jamaica, that if such information became public she would have to consider leaving Jamaica.

“Mr McWeeney highlighted the evidence of Ms Gilbert, an insurance broker with expertise in kidnapping and extortion risks in Jamaica, that ‘if information about the value of Sandals and Beaches were to get out in the public domain, my advice to you would be to leave the country immediately by private plane’.”

In The Bahamas, the resort assets include Sandals Royal Bahamian in Nassau and Sandals Emerald Bay in

Exuma, plus Fowl Cay also in the Exumas. Then-senior justice Charles, however, rejected this argument on the basis that “the evidence relied on in an effort to demonstrate a real risk to the beneficiaries’ safety does not rise to the standard required to warrant a privacy order”.

She also dismissed the subsequent bid by Adam Stewart and his two siblings to obtain permission to appeal her ruling to the Court of Appeal, finding that they were “clutching at straws” and that an appeal had “no realistic prospect of success” and was “palpably weak”.

And then-senior justice Charles also suggested that, by seeking a “stay” of her initial ruling, Adam Stewart and his siblings were trying to delay a request for the Supreme Court to determine whether Mrs HammersmithStewart’s claim violated the trusts’ “no contest” clause.

She branded this “the worst sort of satellite litigation geared at delaying applications which ought to be heard expeditiously”.

Sir Ian’s latest verdict, dealing with that “no contest” application, confirmed that the battle revolves around two Bahamas-domiciled trusts - the Coral Ridge Trust and the Hightree Trust - which were settled by the late Mr Stewart in February 2011 as part of his estate planning to ensure all family members benefited from the wealth he had amassed.

Sterling Trust (Cayman) holds the shares in Cromwell Trust Company, the trustee for the two Bahamian trusts, via another trust known as the Cromwell STAR Trust.

Following Mr Stewart’s death, the “enforcer” role, with powers to direct the appointment of Cromwell’s directors, lies with Adam Stewart.

Among the Coral Ridge Trust’s holdings is a 100 percent ownership interest in Oasis Global, a Panamaincorporated company that, in turn, holds all the shares in Sandals Resorts International 2000. The latter owns and operates the Sandals and Beaches resort chains.

Other holdings under the Coral Ridge Trust umbrella

include 100 percent ownership of Bahamas-domiciled Vinalhaven Holdings, which held $291m in cash as at January 18, 2021, and all the shares in another Bahamian company, Blue Yoda Holdings, which in turn owns the Island Routes group, a tour operator.

Sir Ian, though, noted that governance, decision-making and management powers for the Sandals and Beaches hotel chain lies not with Cromwell or its directors in their capacity as Coral Ridge’s trustees but with an ‘Advisory Board’ headed by Adam Stewart and his sister, Jamie.

The Hightree trust, meanwhile, holds 100 percent ownership in a variety of companies that control real estate assets in The Bahamas, Turks & Caicos and Jamaica, plus vehicles, boats and Sandals’ design and procurement arm and $43m in cash. Among the real estate holdings is property at Old Fort Bay in western New Providence which Mr Stewart “wished” his third wide and her family to receive upon his passing.

The trust deeds, though, were changed on August 16, 2018, to stipulate that any beneficiary (meaning one of the late Mr Stewart’s family members) could be excluded from receiving their inheritance if they initiated legal action challenging any provision in the trusts or agreements governing the business entities underneath them.

As a result, Mrs Hammersmith-Stewart sought a declaration that her legal action does not run afoul of this stipulation and could eliminate her interest as a beneficiary. The battle has pitted herself and her children, referred to as the US family, against Adam Stewart and his siblings, described as the ‘Jamaican family’.

Mrs HammersmithStewart is alleging that, in 2019, her husband said he wanted herself and her children to receive $100m from the Hightree trust upon his passing. Then, in a last will dated May 15, 2020, the late Mr Stewart specified that the US family were also to receive “all other homes,

apartments or residential units outside” Jamaica even if owned by Sandals and Beaches.

She also claimed that the parent companies for Sandals and two other entities were to be dissolved, and distributed to trusts set up for specific family members, with herself and her children to receive 42 percent.

Mrs HammersmithStewart further alleged that she and her children were to gain 8 percent “veto shares” which, when added to their 42 percent, would give them 50 percent voting rights in the family businesses with the “ability to veto shareholder resolutions, protecting our minority position”. And both the US and Jamaican families were to have equal Board representation on these companies.

Sir Ian noted that these arrangements were not signed off by the late Mr Stewart, while the memorandum purportedly providing for the creation of the five new family trusts was allegedly signed by the Sandals founder on January 3, 2021 - one day before his passing. Nor was this memorandum passed to Cromwell.

“Unfortunately, following the founder’s death, [Cromwell] has refused to implement the founder’s wishes for the trusts,” Mrs Hammersmith-Stewart is alleging. Instead, [Cromwell] has departed or threatened to depart from the founder’s wishes in various ways that would prejudice my and my children’s position.

“I am deeply concerned that the reason Cromwell has departed, or has threatened to depart, from the founder’s wishes for the trusts is that the majority of [its] directors are subject to serious conflicts of interests and susceptible to the influence of Adam” because most are officers and employees of Sandals and therefore owe their jobs and income to him Not surprisingly, Adam Stewart and his siblings are disputing Mrs Hammersmith-Stewart’s allegations and her interpretation of the late Mr Stewart’s wishes. The latter, though, is requesting that the Supreme Court order Cromwell’s removal and replacement.

The Private Trust Corporation, a Bahamas-based

financial institution, was named as her preferred successor or candidate for the role of judicial trustee.

Cromwell, after Mrs Hammersmith-Stewart alleged that relations between the two parties had “broken down”, and she had “lost all trust and confidence” in its ability to be impartial, sought the Supreme Court’s determination on whether her bringing legal action violated the “no contest” clause.

Sir Ian, in his verdict, wrote: “Cheryl’s claim in a nutshell is a direct attack on the independence of Cromwell in what she says is the favouring of Adam over her and her children in addition to what she perceives as their failure to carry out the expressed wishes of the founder as the settlor of the trusts.

“The relief sought is that Cromwell be replaced while she pursues this claim.

There is no direct attack on any provision of either of the trusts or any other deed of trust or trust indenture declared by Cromwell. It is a direct attack on Cromwell’s performance. The action on its face is not a challenge to the validity of a provision of the trusts.”

The Chief Justice added that, by seeking to remove Cromwell, the action was “an indirect attack” on Adam Stewart’s ability to choose its directors. However, he found it did not eliminate those powers in relation to the Advisory Board that governs the Sandals and Beaches resort chains, and added that it did not “fall squarely into the four corners” of the “no contest” clause.

“The Advisory Board has the reserve power to give directions in relation to the management of Sandals,” Sir Ian noted.

“These powers will remain unchanged upon the change of trustee... The Advisory Board, and not either Cromwell or STAR Trust, have decision-making power over the management of the Sandals business.

“To the extent that Sandals is governed or managed, it is managed by the Advisory Board... I therefore accept the submission that Cheryl’s application to remove Cromwell does not affect the position of the Advisory Board, so there is no severing of the link between Sandals and the trusts.”

NOTICE NOTICE is hereby given that LORNA STEWART-ARMBRISTER of Joan’s Drive off East Street South, Nassau, The Bahamas applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/ naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 5th day of February 2024 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.

NOTICE NOTICE is hereby given that SALANA SOLOMEY POLIDOR of PO BOX:NIL #36 Brougham street, Nassau, The Bahamas applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/ naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 29th day of January 2024 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.

NOTICE NOTICE is hereby given that LOVAN GAIL PORTER of Cool Acres off Joe Farrington Road, Nassau, The Bahamas applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/ naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 29th day of January 2024 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.

THE TRIBUNE

Monday, February 5, 2024, PAGE 9

Bahamas cool over IMF interest rate rise nudge FROM PAGE B1 international reserves accumulation, even though domestic short-term interest rates are currently 250 basis points (2.5 percentage points) below those in the US,” the Washington D.C.-based Fund said in its report.

“However, capital flows remain sensitive to interest rate differentials, especially during uncertain market conditions. Liquidity management operations, and allowing short-term interest rates to rise toward those in the US, would help mitigate these risks, reduce banks’ carrying cost of reserves and narrow the spreads between deposit rates and rates on loans to private borrower.”

But, based on the IMF’s report on the “authorities” response to this, The Bahamas is unlikely to be following its interest raterelated recommendations.

“Regarding the sensitivity of capital flows to interest rate differentials, the authorities believe that the risk of sudden capital flight is insignificant given existing capital flow management measures, and that interest rate differentials could only play a role in exceptional circumstances,”

INTERNATIONAL MONETARY FUND HEADQUARTERS the Article IV report said of this nation’s response.

No country agrees with, or adopts, all the IMF’s economic policy recommendations and adjustments, and it appears likely that the IMF based its analysis on open economies where capital flows freely across borders as opposed to a country such as The Bahamas where there are more restrictions in place to protect the fixed exchange rate regime.

John Rolle, the Central Bank’s governor, could not be reached for comment before press time last night, but the regulator is likely to be confident that there are sufficient controls in place

to prevent sudden - and significant - capital flight searching for better yields from the higher interest rates that exist elsewhere.

The Central Bank’s discount rate has remained unchanged at 4 percent since 2016, and only been changed three times in the two decades since 2003.

Any increase in interest rates, which effectively represent the cost of money or credit, would disadvantage borrowers as it will increase the payments necessary to service their loans but benefit savers as they would see a rise in deposit interest income.

The Central Bank’s own website shows the average

interest rate on short-term three month deposits stands at just 0.25 percent, creating a wide and profitable interest spread for commercial banks given that the average lending rate for residential mortgages and consumer loans presently stands at 5.1 percent and 12.86 percent, respectively.

Mr Rolle, as recently as the Central Bank’s quarterly press briefing, said “the Central Bank’s monetary policy stance is to continue to accommodate firmer credit growth” - thus giving no signal that it plans to follow the IMF’s suggestion any time soon.

However, the IMF said its study showed that net foreign currency purchases by the Central Bank “are sensitive to interest rate differentials in specific circumstances. These effects are economically significant during periods of elevated global risk aversion or when the foreign currency sovereign credit rating falls below investment grade”.

The Bahamas’ sovereign credit rating is presently at ‘junk’ status with both Moody’s and Standard & Poor’s (S&P), and the Fund’s study added: “There is scope to raise interest rates without major harm to credit growth or the

economic recovery, should global volatility or the negative interest rate differential put pressure on international reserves.

“During periods of elevated global risk aversion or when assessments of sovereign risk are high, interest rate differentials have materially positive effects on the central bank’s net foreign exchange purchases. Local projections suggest that the transmission of changes in the bank rate to domestic interest rates is high but depends on the degree of excess liquidity in the domestic banking system.

“Still, interest rate tightening will likely have little impact on domestic credit, with almost no noticeable effect on economic activity.” High excess liquidity in the commercial banking system, which stood at $2.884bn at year-end 2023, was said to largely limit the knock-in effect of interest rate cuts to residential mortgages.

“When faced with high excess liquidity, banks are prone to reduce deposit rates quicker in response to a cut in the policy rate, possibly to discourage additional deposit accumulation or to reduce the carrying cost of the existing liquidity.

In contrast, banks adjust lending rates less aggressively, pushing banking spreads higher, although not significantly so in the medium-term,” the IMF study added.

“Except for a small impact on residential mortgages, cuts to lending rates do not elicit statistically significant effects on private sector credit. One percentage point cuts to the residential mortgage rate increase the stock of residential mortgages by less than 0.1 percentage point over eight quarters.

“In contrast, consumer credit appears almost immune to cuts to consumer lending rates.

Consequently, the effect of cuts to the weighted average lending rate on overall private sector credit, while positive, is marginal and statistically insignificant.

In contrast, cuts to the weighted average deposit rate reduce deposits, but the effects are modest at best,” it continued.

“There is limited scope for using interest rate decisions to influence private sector credit, but raising interest rates is equally unlikely to do significant damage to credit growth.”

THE TRIBUNE

After Washington state lawsuit, Providence health system erases or refunds $158M in medical bills

By GENE JOHNSON Associated Press PROVIDENCE health care system is refunding nearly $21 million in medical bills paid by low-income residents of Washington — and it's erasing $137 million more in outstanding debt for tens of thousands of others — to settle the state's allegations that it overcharged those patients and then used aggressive collection tactics when they failed to pay. The announcement Thursday came just weeks before Attorney General Bob Ferguson's case was set for trial against Providence Health and Services, which operates 14 hospitals in Washington under the Providence, Swedish and Kadlec names.

The state argued that the medical system's practices violated Washington's charity care law, which is considered one of the strongest in the country. It requires hospitals to notify patients about the availability of financial aid and to screen them to see if they're eligible for discounts before trying to collect payment.

Providence trained its staff not to accept it when patients said they couldn't afford the bills, Ferguson said. "Hospitals — especially nonprofits like Providence — get tax breaks and other benefits with the expectation that they are helping everyone have access to affordable health care," Ferguson said at a news conference.

"When they don't, they're taking advantage of the system to their benefit."

Recently expanded, the law now covers roughly half of all residents, making them eligible for free or reduced-cost care at hospitals in the state, according to Ferguson's office. It applies to out-of-pocket hospital costs, including copays and deductibles.

Those earning up to four times the federal poverty standard could qualify for assistance. For example, a family of four earning $120,000 a year could be eligible for a 50% discount, depending on the hospital.

In a statement posted to Providence's website, the organization said it was simplifying how it provides information about financial aid to patients and working to make the application process clearer.

"Charity care and financial assistance are vital resources for patients who cannot afford health care," said Providence Chief Financial Officer Greg Hoffman. "Providence is committed to providing support to those who need it most, and we will continually evaluate our efforts and make sure they fully meet the needs of those we serve." Providence has already erased about $125 million in medical debt following the state's lawsuit two years ago, said Ferguson, a Democrat who is running for governor. Under the settlement, Providence will also pay $4.5 million to the attorney general's office for legal fees and the costs of enforcing the charity care law. In all, about 65,000 patients will see their outstanding debt erased and 34,000 will receive refunds, plus 12% interest, for bills they managed to pay despite difficult circumstances. The debts being erased range from less than $1 to $262,000, while those receiving refunds will get amounts varying from under $1 to $293,000, Ferguson's office said. The latter category includes Kevin and Evangeline Holloman, who spoke at the news conference.

The couple said that after their daughter was born in 2020 at Swedish hospital in Seattle, they received a bill for $7,000 and were put on a payment plan of $250 per month.

Monday, February 5, 2024, PAGE 11 SWEDISH Medical Center health care workers look on from inside the hospital, April 16, 2020, in Seattle. Providence health care system is refunding nearly $21 million in medical bills paid by lowincome residents of Washington — and it’s erasing $137 million more in outstanding debt for tens of thousands of others — to settle the state’s allegations that it overcharged those patients and then used aggressive collection tactics when they failed to pay. The announcement was made Thursday, Feb. 1, 2024.

Photo:Elaine Thompson/AP