By RICARDO WELLS
Tribune Staff Reporter
rwells@tribunemedia.net
FNM Deputy Leader Peter Turnquest said that Standard & Poor’s (S&P) decision to downgrade the Bahamas’ sovereign creditworthiness this week justifies the “conservatism” displayed by his party in the recent budget debate.
On Tuesday, the international rating agency downgraded the Bahamas’ credit rating to BBB/A-3, just one tier away from legitimate junk bond status.
In a statement, Mr Turnquest said despite cautionary advice presented to the government by both himself and Free National Movement colleague St Anne’s MP Hubert Chipman during the debate, the government proceeded with its “overly optimistic” growth projections.
The East Grand Bahama MP maintained comments he has argued since May, insisting that the Christie administration has placed “too much reliance upon one significant investment” – Baha Mar.
“We take no pleasure in making the observation that we were justified in our conservatism, which true to past practice was dismissed as political and negativity,” he said.
“After a series of similar unheeded advice, we hope that finally the government will get it, that when it comes to the future and stability of the Bahamas, the opposition has no interest in politics and offers the benefit of years of experience in the financial services industry, financial analysis and understanding of economic trends.
“To the ordinary resident, independent sovereign credit risk ratings are confusing and fly in the face of our sovereignty as promoted by our government, as they seek to stir up emotions where calm intellectual thought is more appropriate.”
Mr Turnquest indicated that S&P pointed to a number of structural and self-inflicted deficiencies and trends not helped by the government’s arrogant and naive stance towards investors.
He said the aggressive approach by the government towards such investors and its “slothfulness” in identifying innovative strategies to expand the country’s economy were the primary causes of this downgrade.
“Our current economic model has some structural deficiencies and threats that inhibit further expansion. For instance, our education model is outdated and does not meet the need of a modern Bahamas. It has come to the point where tinkering around the edges will not fix the problem and repeated reports of failure by successive governments,” he said.
Mr Turnquest said the FNM remains committed to a new vision for the Bahamas.
He said he has encouraged the government to reject the “tired and outdated political hacks of the past” and focus its collective attention on solving some of the many challenges affecting the nation and the factors contributing to our continued slip in credit.
Meanwhile, when contacted for comment on this matter, Mr Chipman stated that it is time for the country to get serious about its finances.
“We have to buckle up our belts, this decision shows that as a country, our financial concepts aren’t working.
“Whether we want to believe it or not the decision will have a tremendous effect on what we do. The bottom line is, every dollar we borrow from here on out will cost us more to get. That can never be good.”
A sovereign credit rating is a general opinion of a country’s ability to repay its debts as and when they fall due and considers the risk of investing in a particular country given its assessed political and economic profile.
Lower credit ratings result in higher borrowing costs and fewer options because the borrower is deemed to carry a higher risk of default. The lower the credit rating, the more an investor or lender will demand to be compensated for the risk of holding that debt.
Standard & Poor’s warning hinted at the potential of another downgrade in the near future.
S&P warned that the Christie administration’s handling of the Baha Mar dispute – not just the outcome – would be a major factor in determining whether it lowered the Bahamas’ credit rating again.
Comments
Economist 8 years, 8 months ago
Finally, the opposition is showing that it can run the country. Keep dealing with the issues.
The most important issue is our economic situation. Keep focusing on that.
Make the government accountable for the Vat....how have they spent it....the dangers of NHI....keep going back to the various audits and hold government accountable for the waste.
Where are we on the collection of real property tax???...etc.
John 8 years, 8 months ago
Don't get blindsided into believing that Bah Mar alone is the reason for the credit downgrade. Just look at what's going on around the world with Greece and China and even with the U.S. Economy. Retailers are complaining that even with lower gas and utility prices there has been no significant growth in sales as was expected. I phone sales are off by almost 50 percent and walmart and Target says sales are flat. Here in the Bahamas businesses and consumers have had to swallow the greatest among of tax increases in recent times and despite slowing sales, the cost of doing business and the ease of doing business continues to be challenged. The fallout from the 40 percent rise in the minimum wage is yet to be felt and the legalization of web shops while creating significant employment, has caused other problems in the economy, at least in the short term.
John 8 years, 8 months ago
The fuel savings alone from BEC and gas imports should have been enough alone to stimulate and jump start the economy, but it was never passed down to businesses or on to consumers. The worst thing that can happen now is another recession, when the average person has exhausted all of his/her savings and is still playing catch up with mortgages and other significant bills.
OMG 8 years, 8 months ago
Never passed along as we are paying for years of overpriced and inefficient electricity supplies by overpaid workers with total lack of foresight for future planning.
TruePeople 8 years, 8 months ago
No investment in solar power........... in this effing hot country
Well_mudda_take_sic 8 years, 8 months ago
Assuming he is not saddled with his own conflicts of interest and has fulfilled all of his financial disclosures required by statute, the FNM should give very serious consideration to Peter Turnquest becoming the new face of its leadership at the earliest possible time. Minnis and LBT need to be forced to step aside; Minnis in fact should be made to resign!
OMG 8 years, 8 months ago
Lets face it our politicians are incompetent and act like third world dictators. Bahamar is just a further example of little men with a misplaced patriotism trying to take on the big boys. Companies like Rosewood don't need the Bahamas and have shown that. Keep on threatening investors Mr big shot Fred , you are doing a great job of dissuading new investors. I am not a financial wiz but could see this downgrade coming and by the way please stop lying that the Bahamian dollar is on a par with the US dollar. That only applies to someone spending here. The Bahamian dollar is worth about 96 cents to the US dollar. Worse is to come unless they swallow their pride and realize that the Bahamas is a speck on the world map and there are plenty of other places to go.
TruePeople 8 years, 8 months ago
If Bahamas is 96c to 1US that's good still! JA is like 107$JA to 1$US. Guyana is like 210+$GY to 1$US. Actually i don't even know if that Bahamas has it's own currency...... we have fake dollars with pretty colours.... but i swear the US has owned our currency from long time.
Well_mudda_take_sic 8 years, 8 months ago
Re-post: Until the FNM replaces Minnis with someone like Peter Turnquest, most Bahamians really can't blame Christie for not resigning in shame. The PLP will hands down win the next general election if Minnis remains the leader of the FNM. Minnis is nothing but a corrupt "all for me" politician who believes, in his small warped disingenuous and dishonest mind, that the laws of the land do not apply to him. Notice how you no longer hear him or any of the other FNM MPs speaking out loudly against the serious conflicts of interest that Christie and Maynard-Gibson have involving their immediate family members and Baha Mar. Minnis has not only permanently compromised himself as a result of his own blatant and illegally undisclosed conflict of interest involving the Public Hospital Authority, but he has also compromised all of the other sitting FNM MPs. Until Minnis is removed as leader of the FNM, no one in the opposition will have a leg to stand on when it comes to speaking out against or calling for a special commission of enquiry to investigate the many corrupt conflicts of interest that exist within our government from the parliamentarian level right on down! Bradley Roberts alone will see to that!!
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