We can adopt the US Dollar like Panama and Ecuador. Then there would be no devalue.

We cannot just adopt the dollar, like Panama, that country had sufficient dollar inflows that aren't like the Bahamas tied to high volatility while also running multiple period substantial current account surpluses as well as having the support of FDI infows to justify a dollar substitution regime. The Bahamas is running a double deficit, current and primary account. We would have to either accumulate dramatic private dollar savings or run current or primary account surplus for a long period of time before being in a financial position to support that sort of regime since we wouldn't have the Federal reserve to inject liquidity into our domestic banking system if there was an economic down turn. Idealistically, yes dollarization would be great as it would lower transaction costs but we don't have the Fed to back us up in case of bank runs, or anything sort of monetary policy insurance, and have to run a very tight fiscal ship with no room for negative economic shocks.

If you can see the Bahamas running either private savings above the current 13%, near 40-50% or public savings through a series of primary account surpluses, or a positive balance of payments....then yes. But that's not our reality.

The peg is a good constraint on our government to be fiscally responsible, We do not have the economic base to support a floating regime, or the savings for full dollarization. The peg is currently the best fit and it only serves the Bahamian tax payer the faster the government gets to grip with the underlining macroeconomics of being a pegged economy and begins pushing for long term policies to get our exports and mid size firms up and running it will be good.

The sudden shock of a devaluation is never desirable for economic policy setting.

Nope, do what Argentina and many other South American countries were allowed to do in the 1980's. "Brady Bonds". The Bahamas debt is no where near what theirs was.

If James Smith says so, it is so, The Bahamas is blessed to have such a brilliant man among us. and the man is not mean spirited, he is very calm and intelligent, and he has never ran for political office. He serves his Country very well. May the good Lord continue to bless you Mr: Smith.

I want some of what you are smoking. James Smith, with his public pronouncements has been on the wrong side of everything that he has every spoken about. And he was the junior minister of state for Finance in the previous Christie regime, that wrought wrack and ruin on the economics of this country. His favourite word is "structural", and he doesn't understand what that means, otherwise he would repair the structure of the monolithic, moribund, restrictive economy. Exchange controls hold Bahamians down, by denying them the ability to invest abroad and have access to foreign capital to drive their businesses. He and the PLP is the worst of the worst things that could have happened to the Bahamas upon independence.

He says so because, if The Bahamas adopted the US Dollar, the Government would have to be fiscally responsible and he does not feel that we are capable of that. So it looks as if we will have to wait for the IMF to force that on us, as they have VAT (the reported, in early 2013, that we were going to have VAT in Mid 2014).

Then we can get sensible and adopt the US D. and then we will see our economy grow.

Ding bat Smith essentially confesses here that a floating rate Bahamian dollar would indeed be worth considerably less than one U.S. dollar as a result of the gross mismanagement of our country's financial affairs by successive alternating Hubiggity and Vomit led governments. He does so because he clearly sees the writing on the wall which says there is no way in hell we can maintain our foreign currency reserves at a level sufficient to keep our existing one-for-one peg as a result of our recurring annual budget deficits financed by an ever increasing amount of national debt. Smith himself has been instrumental in the creation of the financial mess that the Bahamas finds itself in today, leaving the Bahamian dollar greatly exposed to external pressures for its devaluation against the U.S. dollar. This guy could never say no or cry foul to any Prime Minister who wanted to borrow willy-nilly to buy electoral votes when he was Governor of our Central Bank and later served as Minister of State in our Ministry of Finance. Instead of hanging his head in shame, he has the temerity and audacity to try stay in the public limelight with rumours circulating that the PM is now considering appointing him Chairman of Bank of The Bahamas (BoB) and then arranging for the sale of BoB to the holding company for the Colina group. 'From worse to worser' as most Bahamians will no doubt soon learn!

Safe to say if it was depegged, govt would spend way too much, leading to more devaluation and soon it would be a one way ticket to the Jamaican dollar. Very, very bad idea.

Now getting off of oil, and going to solar would do wonders for the fiscal position! Far, far more than anything else. Those fortunes BEC spends on fuel gotta come from somewhere!

Exchange control is hindering growth but their are many ways to get around it. Find a company that does a lot of business in US dollars. For instant, if Commonwealth Brewery needs 20 million in US dollars, all they have to do is call a company like Atlantis. Commonwealth would deliver a 20 million Bahamian dollar cheque to Atlantis and Atlantis(from US account) wires 20 million US dollars to Commonwealth Brewery US base account. No bank conversion fees and no Central Bank approval. Its a win/win for both companies. They both save $50,000 each. Atlantis needs Bahamian dollars to pay it staff and Commonwealth Brewery needs US dollars to buy supplies.

Also important is to remember that foreigners can borrow USD to do a project in The Bahamas, at say 4% or 5%, whereas a Bahamian has to borrow B$'s at 9% or 10%.

The above means that, on a 10 million dollar loan, the foreigner has a distinct advantage over the Bahamian in his own country. That's why the foreigners own the hotels and not the Bahamians.