The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas needs “substantially more than a band-aid” to address its fiscal problems, a leading businessman yesterday questioning whether ongoing maintenance/operating costs for new infrastructure projects had been factored into future Budgets.

Franklyn Wilson, the Sunshine Holdings and Arawak Homes chairman, told Tribune Business that continuing maintenance costs associated with the new roads and National Stadium, for example, would only add to the Government’s spending and deficits going forward.

Also questioning why the Bahamas continued to hold general elections in May, given that this left a limited three-week window in which to finalise and unveil the Government’s Budget, Mr Wilson acknowledged that the current rate of growth in the Bahamas’ debt-to-GDP ratio was “alarming”.

And he told Tribune Business that the Government’s ability to respond to its looming fiscal dilemma was being progressively “weakened” because the average Bahamian’s standard of living had declined when compared to before the 1990-1991 Gulf War.

Noting the statements on the Moody’s downgrade by Michael Halkitis, minister of state for finance; his predecessor, Zhivargo Laing; and PLP chairman Bradley Roberts, Mr Wilson said all three were “accurate” in their own way.

Mr Halkitis had acknowledged the issues in the Moody’s report and pledged to do something about it, Mr Roberts had blamed the Ingraham administration, and Mr Laing - while seeming to accept responsibility, said the Christie administration had failed to position the Bahamas for change and show Moody’s it was serious about doing something.

“While they may be accurate, none of them added meaningfully to the public debate,” Mr Wilson told tribune Business.

He then questioned whether it was “in the national interest” for the Bahamas to have a general election in May, as it had now done three successive times, given that the Government’s financial year ended the following month.

This meant a new administration had five weeks in which to get a Budget to Parliament and pass it, with ministers in office for mere days before the obligation came up.

“It causes the Government coming in to office to co-opt whatever the civil servants have prepared,” Mr Wilson said. “It seems to me in the national interest to consider whether or not this is good, as it seems it has some serious downfalls.

“It’s very difficult for a new Minister to come in and say we want to cut $100 million out of the Budget. What Minister of Finance can do that? How’s that going to happen? It’s going to take time.”

Mr Wilson added that Bahamian “culture and tradition” meant there was “a lot of pressure” on governments to continually embark on new capital works projects year after year.

“It is not apparent to me, and I invite others to consider this, whether sufficient planning is done to say: ‘We do this in this Budget cycle; how’s the operating costs going forward going to affect future cycles,” the Arawak Homes chairman told Tribune Business.

Using the New Providence Road Improvement Project as an example, he questioned whether Budget planners had made allowances for maintenance costs associated with their upkeep, and the cutting of grass, sprucing up verges and the street lighting. There was also the question of unpaid compensation for land owners whose properties had been acquired to facilitate the project.

Noting that the new roads had their benefits, despite the costs, Mr Wilson questioned whether provisions had been made for their maintenance in future government budgets.

“There are certain systemic factors pushing our deficit higher and higher without the politicians doing anything new,” Mr Wilson said, including the National Stadium’s maintenance in the debate.

Agreeing that the debt-to-GDP ratio’s growth rate was “so decidedly downward it’s alarming”, Mr Wilson said that the main problem in trying to arrest it was that Bahamian living standards had declined over the past two decades.

Stressing that this was not meant as a partisan political statement, Mr Wilson told Tribune Business: “If the standard of living is going down, the Government’s capacity to respond to it is being weakened.

“It speaks to the Government’s shrinking capacity to address the real problem, and the real problem is the standard of living of the average Bahamian is declining.”

He suggested that it was this decline, over the past 20 years, that the Prime Minister was referring to when he described the Moody’s downgrade as “sobering”.

“We’re at the point where this ain’t time for a band aid. We need substantially more than a band aid,” Mr Wilson told Tribune Business.