The Tribune

IN YESTERDAY'S Business section of The Tribune, Standard & Poor's --an international credit rating agency-- urged the Bahamas and the Caribbean nations to improve their national savings rate, and reverse the decline in foreign direct investment, if they expect to enjoy "consistent economic growth".

It noted how reliant the Bahamas is on foreign direct investment to cover its annual spending on imports. Figures show that the last "boom" period in the global economic cycle was between 2004-2007 during the Christie administration. The Christie government was the beneficiary of this period.

S&P also indicated that during this period the Bahamas attracted enough foreign investment to more than cover the PLP government's account deficit. However, the recession followed just as the transition came for the Christie government to step down to be replaced by the new Ingraham administration. It fell to the Ingraham government to heroically struggle for the next five years to keep the country afloat during the worst global recession that the world had experienced in many years. Obviously there was no longer enough foreign investment coming in to cover the Bahamas' deficit.

World banks' lending was drying up, therefore, investment funds were not available, and the Bahamas was among the many countries that suffered when investors had to discontinue their plans. The Bahamas' major industry -- tourism -- was also hit. Because of austerity measures in their own countries, visitors could no longer afford vacations to exotic resorts, especially ones as pricey as the Bahamas.

And now with the sudden spike in crime since May 7 -- and yesterday's gangland style shoot-out -- the Christie government will have a rough path to hoe if it hopes to continue to attract the needed foreign investor.

S&P noted that the Bahamas, considering the interest it has to pay on servicing its debt -- 13 per cent of general government revenue last year -- has the third highest debt repayment burden in the Caribbean. It also pointed out how quickly that debt has grown between 2001-2011, rising as a percentage of GDP by 128 per cent.

As Business editor Neil Hartnell wrote in yesterday's Tribune: "The implication of the S&P report, together with Moody's recently expressed criticism of the new government's proposed $250 million mortgage relief plan, are that Wall Street and the international markets, together with the likes of the International Monetary Fund (IMF) will be scrutinising the upcoming Budget details for signs that the new Bahamian government is committed to fiscal prudence."

This government cannot afford to spend money foolishly, regardless of the mindless promises that it made on the campaign trail. Any Bahamian with sense -- even in the good times -- should have known that in no way could the PLP have lived up to its promise to repay their mortgages. Already PLP ministers are in nail-biting sessions and seeking advice from bankers as to how to save face and at least make a token gesture of keeping its promise to its constituents to forestall bank foreclosures on their homes.

The Moody report, which had earlier downgraded the Bahamas' credit rating, said that the PLP's mortgage relief plan would undermine the efforts to rein in the Bahamas' more than $4 billion debt. It implied that if the government went ahead as outlined in its plan it could further downgrade this country's sovereign credit rating.

After announcing its mortgage relief plan - which it planned to fulfil within its first 100 days in government -- the banks said that already there were signs that more Bahamians were now defaulting on their mortgage payments in the expectation that government would bail them out.

The Christie government does not know how much hot water it has poured down on its collective heads.

Just a few days ago, about 10 hotel workers -- housekeepers and gardeners -- were busy grumbling. They were hot under the collar because they felt that already they were getting shabby treatment from their government. The gist of the heated discussion was that they believed it unfair that as they were also PLP their government would not also pay their mortgages -- why them, and not us? was their question. Of course, an FNM was on the sidelines having great fun in egging them on.

The FNM supporter was laughing at the irony of the situation. However, the PLP supporters were in dead earnest and saw nothing to laugh about.

Mr Christie's government will have a lot of explaining to do when it starts "cherry picking" as to who will be saved and who will be allowed to sink in their own debt.

Meanwhile, the FNM MPs will have to keep their eyes and ears wide open and not let the PLP government sink the whole country in trying to do the impossible with the Bahamian people's dwindling dollars.