The Tribune

By KYLE WALKINE

Tribune Staff Reporter

kwalkine@tribunemedia.net

DEMOCRATIC National Alliance (DNA) Leader Branville McCartney yesterday blasted the government for increasing the country’s debt from $4bn to $5.1bn since taking office two years ago. 

According to Mr McCartney, the higher the country’s debt-to-GDP ratio, which now stands at 60 per cent, the less likely it is that the country will be able to repay its debt. 

“Simply put, the government owes far more than it takes in,” Mr McCartney said in a press statement released yesterday.

“Such a reality is unsustainable and will make it even more difficult for the country to borrow in the future thus leaving the Bahamas open to further economic downgrades by the likes of the International Monetary Fund (IMF), Standard and Poors and countless other ratings agencies.”

On Wednesday, just after Prime Minister Perry Christie wrapped up his budget communication, State Minister of Finance Michael Halkitis announced the government’s plan to borrow $343m the 2014/2015 fiscal year. This figure represents a decrease from the $465m borrowed during the 2013/2014 fiscal year, he said.

However, during his speech, Mr Christie said his administration is committed to ridding the country of the “fiscal albatross” that hangs around its neck.

“By breaking the vicious cycle of deficits and debt buildup on a permanent and sustainable basis, we will reap a sizable fiscal dividend that will be available to adequately finance our aggressive economic and social policy going forward,” the prime minister said.

As part of an effort to boost revenue, Mr Christie said the government will strengthen the collection of existing taxes.

Mr McCartney applauded the government for taking the advice of the business community and the DNA regarding the collection of outstanding taxes. 

“We are only saddened that conversation surrounding the new regime had to denigrate into petty bickering before finally opting to listen to the voice of the people,” the DNA leader added.  

He also hit out at the government over its continued interest in foreign direct investment saying that for years successive governments have continued to rely on foreign investors to save the economy. 

“While the limited economic benefit which such developments provide cannot be ignored, particularly in light of our current tourism driven economy, the time has come to diversify,” he said.

“The DNA asserts that if tourism is to remain the government’s focus, then greater ownership opportunities must be provided for Bahamians within that sector.”

According to Mr

McCartney, the government’s job creation efforts have, for years, only fed Bahamians with the “table scraps of major developments” but never provided them with a chance at economic freedom. 

Mr McCartney said the prime minister’s budget was filled with the same “political rhetoric and promises” that Bahamians have become accustomed to hearing from their nation’s leader. 

On Wednesday, the official opposition dismissed the government budget communication as a “dismal failure” that contained nothing but “false hope” and the “same old promises”.

During his budget address, Mr Christie spoke of the government’s plans to boost the country’s revenue, which include the regulation of the web shop industry and the implementation of Value Added Tax (VAT) on January 1 at a rate of 7.5 per cent.

“The mix of measures will allow us to move progressively to: eliminate the untenable structural imbalance between recurrent expenditure and revenue by the 2015/2016 fiscal year; sharply reduce the GFS deficit by 2016/2017 and arrest the growth in the government debt burden and move in onto a steady downward path to more sustainable levels,” Mr Christie said.

The economy’s growth in 2013 came in at 0.7 per cent, down from the 2.7 per cent that was projected by the IMF and which was factored into the previous budget communication, Mr Christie said.

Mr Christie said this “weaker than expected performance“ was due to softness in the tourism industry. He said it is estimated that tourist expenditure declined by some three per cent in 2013, as the number of stopover visitors fell by four per cent, from 1.42 million to 1.36 million.

Mr Christie said the country’s “tepid” growth in the 2013/2014 fiscal year impacted recurrent revenue.

The government expects recurrent revenue to come in at $1.465bn, which is 2.5 per cent less than was budgeted. Recurrent expenditure is expected to come in at $1.720 billion. The country’s GFS deficit is expected to be $462m, or 5.4 per cent of the GDP, in the 2013/2014 fiscal year.