In the country report on this Caribbean country, IMF staff says: "The authorities continue to make substantial progress on fiscal consolidation with successful VAT implementation in January 2015 setting the stage for continued improvements in the fiscal position."

Inflation rose to 2.2 percent in January 2015 (1.2 percent in December 2014), as the imposition of the value added tax (VAT) offset the effects of declining oil prices.

IMF Staff urged the authorities to intensify execution of other tax reforms. They have contended that steadfast implementation of the planned fiscal consolidation is key to placing debt levels on a declining path.

The Bahama authorities noted that the "VAT had started bearing fruit and highlighted outstanding issues that are being resolved, including transitioning of the current VAT administrative structure to a new, fully–fledged central revenue administration (CRA) along with the other major domestic taxes, such as real property tax, business license, and stamp duties. A new CRA is expected to come on stream by end–2015, starting with the co–location of the VAT and Internal Revenue Departments. They also noted that the ongoing modernization of customs and property tax departments will further enhance revenue collections."

According to an official release, IMF's Board of Executive Directors "commended the authorities for the substantial progress on fiscal consolidation, and successful introduction of the VAT. They called for steadfast implementation of the planned fiscal consolidation in order to rebuild buffers and place public debt on a declining path."

It says: "They stressed the need for continued revenue reforms, including strengthening tax administration. They also recommended rationalization of current expenditures in the context of a medium–term budget framework."

IMF had last year recommended a slew of tax reforms its previous country report captioned ‘The Bahamas- Tax Reforms for Increased Buoyancy',