The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The International Monetary Fund (IMF) has urged the Bahamian private sector “to continue to press” for the enactment of Fiscal Responsibility legislation before this nation finds itself “in dire fiscal straits”.

Gowon Bowe, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman, said the Fund gave its backing to this key private sector demand when both sides recently met as part of the former’s Article IV consultation process.

He said the IMF representatives pointed to the example of Jamaica, which only took Fiscal Responsibility seriously when it found itself requiring a Fund-organised ‘bail out’, as a situation the Bahamas needed to avoid emulating.

“They [the IMF] said we should continue to press to get that in place before we reach the point of dire fiscal straits,” Mr Bowe told Tribune Business, regarding the private sector’s call for a Fiscal Responsibility Act. “That’s what they encouraged us to continue to press on with.”

The private sector, via the Coalition for Responsible Taxation, views Fiscal Responsibility legislation as something the Government needs to do to ‘fulfill its side of the fiscal bargain’ given that it accepted, and helped to implement, Value-Added Tax (VAT).

Some countries have employed Fiscal Responsibility legislation to make their governments more accountable and transparent on their spending, while others have used it to set targets and thresholds above which certain ratios, such as debt-to-GDP, must not cross.

Such legislation has also been used to curtail excessive government spending, while other nations have employed it to force governments to come back to Parliament should they need more money.

The BCCEC chairman said the IMF team, headed by Wendell Samuel, was very keen to understand the level of private-public sector dialogue in the Bahamas, and whether this was likely to continue beyond the recent collaboration over Value-Added Tax (VAT).

“The IMF were very big on that,” Mr Bowe told Tribune Business. “That was one thing they did highlight. The most important, in their view, was the level of dialogue, discourse and whether the private sector was involved in a balanced manner.”

While business community involvement and feedback appeared to have produced a relatively “positive result” over VAT, Mr Bowe said the IMF was interested in whether this was “a one-off initiative” or beginning of a wider, sustained collaboration with the Government.

The BCCEC chairman said the private sector was adamant that the VAT dialogue “should open the door” to broader interaction with the Government on issues such as the National Development Plan (NDP); trade in services; the World Trade Organisation (WTO) accession; energy reform; and labour and employment issues.

He added that all these matters were viewed as “stepping stones, not the pinnacle”, in terms of the BCCEC and private sector’s involvement with national issues and providing feedback to the Government.

Mr Bowe said the IMF team felt the private sector was being allowed to give input on government-related initiatives, and it “remains to be seen whether we get the necessary type of results.”