The International Monetary Fund published a working paper proposing a methodology to gauge how a trade diversification strategy could reduce aggregate import costs, using granular bilateral import data for The Bahamas. The paper estimates that strategically reallocating around 2 to 3 percent of imports could lower the annual import bill by 2 to 5 percent, depending on the extent of import substitution at intensive and extensive margins. It finds savings would be concentrated in a small number of source countries and product categories, suggesting a targeted approach could deliver faster results and improve the current account to GDP ratio by 0.5 to 1.5 percent, with potential implications for cost-of-living pressures if accompanied by suitable reforms.
International Monetary Fund 2026-03-20
International Monetary Fund working paper estimates targeted trade diversification could cut The Bahamas’ import bill by up to 5 percent
The International Monetary Fund released a paper on how trade diversification could reduce import costs for The Bahamas. Reallocating 2 to 3 percent of imports might cut the annual import bill by 2 to 5 percent, with savings in specific countries and products. This could improve the current account to GDP ratio by 0.5 to 1.5 percent, potentially easing cost-of-living pressures with appropriate reforms.