The Tribune

THE Bahamas Chamber of Commerce’s (BCCEC) chief executive yesterday said he was “sceptical on the timelines” for a Baha Mar resolution, describing the $3.5 billion project as the Government’s economic “Achilles heel”.

Edison Sumner told Tribune Business that the private sector organisation had long felt “it was bad judgment” to tie the Bahamas’ economic growth and employment prospects

to just one project, namely Baha Mar.

Responding after the International Monetary Fund (IMF) cited Baha Mar’s woes as the main reason for further downgrading this nation’s economic growth prospects to just 1.5 per cent for 2016, Mr Sumner said the uncertainty surrounding the project’s fate had increased since its 2015 Article IV report was completed.

“It still appears that is the Achilles heel following the Government at this point,”Mr Sumner told Tribune Business, “and we feel it was bad judgment then to tie the entire economy to Baha Mar.”

The Chamber chief said the project “seems to be more in a state of uncertainty than it was back then”, as the IMF’s Article IV assessment was con- ducted just as the first signs of the dispute that plunged the project into Chapter 11 bankruptcy protection, then provisional liquidation and receivership, were emerging.

Expressing concern over the re-hiring of Baha Mar’s 2,000 terminated staff, plus the project’s completion

and opening, Mr Sumner added: “We hope it hap- pens within several months, but I’m sceptical about that based on the trends we’ve seen in the last few months. I’m sceptical on the time- lines.”

With Baha Mar’s fate outside the Government’s, or any Bahamian’s hands bar the sole local receiver (Raymond Winder), much now depends on the China Export-Import Bank, its intentions and whether it can find a buyer (probably Chinese) to repay 100 per cent its $2.45 billion debt.

Tribune Business revealed on Monday how the IMF has slashed its 2016 growth forecast for the Bahamas by a further 0.7 percentage points to just 1.5 per cent, due to the Baha Mar impasse.

The Fund, in a statement on a December 7-11 mis- sion to this nation, gave a grim analysis of the Bahamas’ short-term economic prospects, the only ‘high points’ being its praise for Value-Added Tax (VAT) implementation and the ongoing National Development Plan (NDP) work.

Mr Sumner described the NDP as “a bright spot” for the Bahamas, and ex- pressed hope that it would combine the private sector’s concerns with “a commit- ment to economic develop- ment by the Government”.

“This cannot be a docu- ment sitting on the shelf,” he added of the National Development Plan. “It has to be a living document.....

“It cannot be a document

that looks pretty and has no action plan behind it.”

The National Development Plan was among the initiatives cited by the IMF as key to countering the “low growth” environment that the Bahamas faces.

“Near term challenges stemming from the low growth environment under- line the importance of implementing past policy recommendations,” the IMF release said.

“Specifically, the 2015 Article IV report recommended structural reforms to support strong and inclusive medium-term growth and competitiveness; re- building fiscal and external buffers; and policies to preserve financial sector stability.”

The IMF statement appeared to suggest that the Bahamas’ pace of reform is too slow, and that numerous structural imbalances will continue to restrain economic growth unless re- moved or corrected.

”Continued fiscal consolidation, through stead- fast implementation of the VAT with few exemptions and expenditure rationalisation, together with public enterprise reform, remains critical to sustaining macro- economic stability,” it said.

“Finalising and implementing the National Development Plan, and further progress in energy sector reform, remain priorities.”

The IMF also brought its growth estimates into line with Standard & Poor’s (S&P), while also shaving another 0.2 percentage points off the Bahamas’ 2015 expansion.

The IMF now expects the Bahamian economy to have grown by just 1 per cent in 2015, a move that marks the

third revision to this estimate.

It had previously cut this nation’s 2015 growth estimates from 2.3 per cent to 1.8 per cent, and then to 1.2 per cent. The latest move means the IMF has shaved more than a full percentage point from its 2015 Bahamas growth forecast in less than one year - something it has also done for 2016.

The new 2016 growth forecast represents a second revision. The IMF had originally forecast 2.8 per cent GDP expansion for the Bahamas in 2016, a figure it had already altered once to 2.2 per cent.

The latest change, announced in an IMF statement on Friday, effectively shaves around $56 million off the Bahamas’ projected economic growth next year, based on this nation’s $8 billion economy.