The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cutting unemployment to the “low double digits range” around 10 per cent was yesterday described by the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman as a more realistic goal than the International Monetary Fund’s (IMF) 50 per cent target reduction.

Gowon Bowe told Tribune Business that slashing the Bahamas’ official 15.7 per cent unemployment rate in half would require this nation to bring jobless levels in line with those in the US - something it was unlikely to achieve.

Pointing out that a 50 per cent cut would require the Bahamas to attain a 7.85 per cent unemployment rate, something it has only achieved during an ‘economic’ boom, the BCCEC chief said: “Ultimately, our target should be to bring it to the low double digits, cutting it to the 9-10 per cent range.”

Mr Bowe’s assessment was backed by K P Turnquest, the Opposition’s deputy leader, who said it was “unrealistic” to believe that the Bahamas would achieve the 7 per cent average GDP growth rate necessary to both cut the unemployment rate by 50 per cent and absorb all school leavers between now and 2018.

“We’ve got some significant challenges,” Mr Turnquest told Tribune Business. “The fact they’re saying 7 per cent growth; what sector is that coming from? How are we going to deliver that?

“Baha Mar may eventually take some of it, but it’s not going to be 6-7 per cent, that’s for sure.”

Mr Turnquest said the Department of Statistics had yet to release the May 2015 unemployment figures, and added: “I think there are a number of things out there that will come home to roost sooner or later.”

Meanwhile, describing the IMF’s full Article IV document as “a sobering report”, Mr Bowe said it reiterated that the Bahamas was not getting “the expected fiscal deficit reduction”, and that Value-Added Tax (VAT) could not deliver the desired result by itself.

“I think certainly that there was a clear message that they [IMF] understand where we are, but we have to be very mindful, even pre-Baha Mar, that there is not the level of growth seen pre-recession, which is going to put significant pressure on the fiscal and deficit ratios, and debt levels,” Mr Bowe told Tribune Business.

“Overall, it was a sobering report but not a blindsiding report. Everything contained in it, the messages had been circulating in the public domain for the last 12 months.”

Backing the IMF’s call for greater fiscal discipline outside any Fiscal Responsibility legislation, Mr Bowe said the report’s contents acknowledged that the Bahamas had yet to see the planned debt and fiscal deficit reductions.

“It’s not having the impact on the fiscal deficit that they were expecting,” he told Tribune Business of recent tax reforms.

“The VAT does not arrest the debt growth if we don’t have either of holding firm on expenditure or regression of expenditure levels.

“That is continuing to beat the drum being beaten since the VAT discussion began: Tax reform is not going to get us where we need to be by itself. Fiscal reform will get us where we need to be.”

Mr Bowe said the IMF report echoed recent concerns expressed by the Inter-American Development Bank (IDB) over ‘skills gaps’ in the Bahamian workforce, and impediments to labour productivity.

“We must not lose sight of that,” Mr Bowe said, adding that improved worker productivity would also aid the fiscal turnaround effort.

Improvements in this area, together with civil service upgrades and completion of the National Development Plan, were also viewed by the Fund as keys to faster Bahamian economic growth and a fiscal turnaround.

“They spoke to the concessions being granted to the various major developments, and the need to evaluate those in a detailed manner to understand the benefits,” Mr Bowe added.