The Tribune

EDITOR, The Tribune.

PRIME Minister Perry G Christie and his Progressive Liberal Party (PLP) government have a mammoth task ahead of them - rescuing a dying economy. I was alarmed after reading in The Tribune about the massive financial deficit the country finds itself in for the 2012/2013 fiscal period. According to the prime minister and the Minister of state for Finance, Michael Halkitis, the budget deficit is projected to be a staggering $550 million. That's over half a billion dollars. The Bahamian government collects approximately $1.5 billion in revenues per annum. However, that is not enough to meet the financial obligations of an ever-expanding government. According to Deputy Prime Minister Philip "Brave" Davis, the PLP, while the official opposition, thought that this year's budget deficit was in the neighbourhood of $300 million. But they had grossly underestimated the deficit by some $250 million. The $550 million deficit is a clear indication that the former Free National Movement (FNM) government had overspent by the hundreds of millions in its effort to stimulate the sagging economy. According to one of the national dailies, the national debt will reach the $5 billion mark before the end of the upcoming 2012/2013 fiscal year. With a population of about 350,000, this means that each citizen is saddled with a debt of $14,285.

The Ingraham administration was emulating US President Barack H Obama's economic policy of pumping government money back into the economy in order to stimulate economic growth. Clearly, the financial advisors in the Obama administration are following the theory of the late British economist John Maynard Keynes. After nearly three-and-half years in the Oval Office, it is now evident to all and sundry that Obama's fiscal policies have failed to get the US out of the prolonged great recession. Now there are fresh reports that the US economy is slowing down again. This bad news couldn't have come at a more inopportune time for Obama, who will be seeking re-election in November against his GOP rival, Mitt Romney. The great recession has already caused several incumbent governments around the world to fall over the past several years. The FNM government was no exception. It looks like the same fate awaits Obama. Even Red China, Brazil, India and many of the nations in Europe are now struggling financially.

According to a US Internet daily, the jobless rate in that country has climbed to 8.2 per cent. And this is not counting the millions of discouraged workers who have simply given up on looking for a job. Even more alarming is a recent report stating that about half of American households are now receiving some form of government handout in order to make ends meet. The US national debt is fast approaching $16.3 trillion. It is projected to reach $17.5 trillion next year. Obama has added $5 trillion to the national debt since early 2009.

When the US suffers, we suffer. Our economic health hinges on the state of the US economy. Many American families have simply cut back on their spending. Of course, this means that more and more Americans are not taking vacations the way they used to when the economy was buoyant. With over 85 per cent of our visitors coming from the US, it doesn't take a rocket scientist to figure out why the tourism sector has floundered in recent years. Many of the hotels in Grand Bahama are either closed or have scaled down. One example is the Grand Lucayan Resort.

This resort has three hotel properties, but only one is open for business, Breaker's Cay. Even our financial services sector is a mere shadow of its past. The two main economic engines of our economy have struggled. Tourism and banking have carried this country for over 50 years. In fact, these two important industries, in their present forms, were created by the legendary Stafford Sands, the Bahamas' first tourism and finance minister in the United Bahamian Party government. He was the architect of the modern banking system and the year-round tourism industry. Since majority rule, no government has introduced any industry that has been able to have the kind of impact that tourism and banking have had on our economy. Not one. Our over dependence on tourism and banking has finally caught up with us. We have failed to diversify the economy. Now the chickens have come home to roost. Before majority rule, ours was mainly an agrarian society. But after 1968, many Bahamians began to view farming and weeding as Haitian work. We don't produce anything. Over 98 per cent of our food products is imported from abroad.

I think that we have entered a new era. I believe that our way of life in this country will experience a radical change in the next decade or so. I also believe that our dollar will eventually be devalued, as was the case with Jamaica under the socialist Manley regime during the turbulent 1970s. I think that the level of poverty in this country will continue to increase, despite the valiant efforts of the prime minister. Sooner or later, Prime Minister Christie will have to start entertaining thoughts of reducing the over bloated civil service. With a population of 350,000, we have a staggering 25,000-odd persons on the government's payroll. What's more, we have government corporations like the Bahamas Electricity Corporation, the Broadcasting Corporation of The Bahamas, BahamasAir and the Bahamas Water and Sewerage Corporation are bleeding the Treasury dry. Obviously, with the nation in a financial mess, the government just cannot continue to allow these unprofitable entities to bankrupt this country. Though measures will have to be taken by the prime minister in the last analysis, successive Bahamian administrations have been guilty of running deficits. With tens of thousands of Bahamians in the civil service, successive governments had no other choice than to overspend. The recent revelation by the prime minister concerning the financial state of the Treasury should cause every Bahamian to be concerned about the future state of our economy. No matter what policies the Christie administration implements, the stubborn facts remain that ours is a service based economy that is overly dependent on the US economy. Outside factors have brought our economy to its knees. While it was politically expedient for the PLP during the past several years to downplay the gravity of the global financial meltdown and its negative impact on our economy, sooner or later the prime minister will have to admit to the nation that our economy has been negatively impacted by outside forces. Between 2002 and 2007, the first Christie government created some 22,000 jobs. But Christie's first tenure as prime minister had coincided with the presidency of George W Bush. The period between 2002 and 2007 saw great economic growth in the US, especially in the housing sector. The first Christie regime was simply a beneficiary of the tremendous prosperity in the US. Now, however, the prime minister will have to contend with a recession which has baffled even the keenest financial minds on Wall Street; and he will have to deal with a president who believes in the Marxist theory of wealth redistribution.

I think that we have entered a new era. I believe that our way of life in this country will experience a radical change in the next decade or so. I also believe that our dollar will eventually be devalued, as was the case with Jamaica under the socialist Manley regime during the turbulent 1970s. I think that the level of poverty in this country will continue to increase, despite the valiant efforts of the prime minister. Sooner or later, Prime Minister Christie will have to start entertaining thoughts of reducing the over bloated civil service. With a population of 350,000, we have a staggering 25,000-odd persons on the government's payroll. What's more, we have government corporations like the Bahamas Electricity Corporation, the Broadcasting Corporation of The Bahamas, BahamasAir and the Bahamas Water and Sewerage Corporation are bleeding the Treasury dry. Obviously, with the nation in a financial mess, the government just cannot continue to allow these unprofitable entities to bankrupt this country. Though measures will have to be taken by the prime minister in the last analysis, successive Bahamian administrations have been guilty of running deficits. With tens of thousands of Bahamians in the civil service, successive governments had no other choice than to overspend. The recent revelation by the prime minister concerning the financial state of the Treasury should cause every Bahamian to be concerned about the future state of our economy. No matter what policies the Christie administration implements, the stubborn facts remain that ours is a service based economy that is overly dependent on the US economy. Outside factors have brought our economy to its knees. While it was politically expedient for the PLP during the past several years to downplay the gravity of the global financial meltdown and its negative impact on our economy, sooner or later the prime minister will have to admit to the nation that our economy has been negatively impacted by outside forces. Between 2002 and 2007, the first Christie government created some 22,000 jobs. But Christie's first tenure as prime minister had coincided with the presidency of George W Bush. The period between 2002 and 2007 saw great economic growth in the US, especially in the housing sector. The first Christie regime was simply a beneficiary of the tremendous prosperity in the US. Now, however, the prime minister will have to contend with a recession which has baffled even the keenest financial minds on Wall Street; and he will have to deal with a president who believes in the Marxist theory of wealth redistribution.

Christie will soon discover that it is lonely at the top as the leader of this country, despite having a massive cabinet. The eyes of the nation are on him now, not on any of his 20-plus cabinet ministers. They will be expecting him to do what he had promised on the campaign trail - fix the economy and create thousands of jobs. Frankly, I don't think that he will be able to avoid the coming economic Armageddon. In fact, not even the mighty United States of America, China, Brazil, Japan, Europe and the former Ingraham administration have been able to do so.

KEVIN EVANS

Freeport,

Grand Bahama