By INDERIA SAUNDERS, Guardian Business Reporter

The approval of the $700 billion U.S. bailout plan may do little to immediately ease the frustrations of Bahamians struggling to pay higher prices, with the State Minister for Finance suggesting those hikes will play out for another year.

"I expect the inflationary pressures to continue to the order of two-plus percent and that will obviously have an impact on the cost of living going forward," said Minister Zhivargo Laing, responding to a Central Bank report indicating costs would increase in the short-term. "When the Bank refers to short-term, they are generally talking within 12 months."

It means that sighs of relief heard all around the country last week after the passing of a U.S. bailout bill - expected to aid this country's economy - may have been premature.

"We're talking to other banking institutions, we're talking to some of the Canadian banks and we're also talking to some of the British banks," said Russell Miller. "There are conversations happening across the board [and] we're looking at every opportunity possible."

The developers were planning a $700 million project on Rose Island before the collapse of its major investor Lehman Brothers earlier this month. Lehman - which sold the Royal Oasis Resort in Freeport to an Irish group a year ago - reportedly has invested $100 million in the Rose Island project to date.

Miller could not say when the developers expect the securing of financing to be done, although he was optimistic that the project would receive the additional funding. He also could not offer when the marina-component of the project, scheduled to be completed in the beginning of next year, would be finished in the project's current state.

"We were going to start to do some infrastructure but we don't know right now, everything is being re-assessed and analyzed," he said. "The marina development, which I think is huge, was the right thing for us to do at the beginning of the project.

"It adds at least a $40-50 million price tag on that property just by doing that marina development."

The project was billed to create 800 permanent new jobs and hundreds more during the construction phase. Sixty condo-hotel units, almost 60 private villas, 50 marina town homes and 135 exclusive estate homes are all planned as part of the development, in addition to a 300-slip marina.

Lehman was just one of the Wall Street titans imperiled by bad investments. The crisis prompted U.S. government authorities to push for a $700 billion bailout, which President George W. Bush believes could stave off a "long and painful recession."

Prime Minister Hubert Ingraham indicated last week in the House of Assembly that while the government was "carefully monitoring the evolving international crisis and its likely economic impact and/or consequence in The Bahamas," it could not yet make any final judgments about the likely magnitude and duration of the crisis.

"It is not easy to make a firm determination as to the duration or magnitude of the problem because problems continue to arise every hour," said Ingraham, pointing to the recent purchase of Wachovia by Citigroup, and the bailout of the Belgium-based Fortis by the governments of Belgium, the Netherlands and Luxembourg.

"And so, to that extent, we are following the restructuring exercise that is taking place on Wall Street which is impacting economies all over the world and The Bahamas being no exemption," the prime minister said, referring to an earlier rejection of a U.S. $700 billion bailout plan for troubled investment banks. "Here in The Bahamas, there are a number of enterprises that have been affected negatively as a result of the event."

While the plan's approval does inject a large amount of confidence in consumer spending, thereby boosting travel, it will do little in the way of defraying the cost of living for Bahamians.

In fact, with the credit crisis woes of recent weeks, the Bank is pointing to short-to medium-term uncertainty for the Bahamian economy —with implications for employment, inflation and government revenue performance.

"Nevertheless, the dollar's weakness could sustain the uptrend in consumer prices and could either ignite a further rise in oil and commodity prices, or at the very least delay any significant short-term easing in these costs," said the report. "Consequently, Bahamians may be confronted with elevated cost of living increases in the short-term."

Bahamians are also now grappling with a 3.7 percent spike in food prices and unprecedented high prices for gas.

Overall, Laing believed inflation in The Bahamas would remain in the range of two to three percent, balancing more in between the two points at a more steady 2.5 percent inflation rate. He did suggest, however, that in some cases that rate may be higher depending on a number of factors in the future and its subsequent effect.

"We don't know what other issues are going to be there. . . like fuel it's going down now, but it may go up again," he said. "We have a couple of things working in our favor at least.

"As it stands, the price of oil is going down, that's one of the things that contributes to an easing in inflationary pressures, secondly, the efforts being made by the US government may produce some economic results that turns their economy around and that may have favorable consequences for the state of things here."

Indeed, Friday's bailout has definitely cast a new light on the future of this nation's tourism industry, now barely treading water with low occupancy even during seasonally slow times. And even there, it may take some time for U.S. spenders to feel confident enough to take vacations on sandy Bahamian shores.