The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former Chamber of Commerce president yesterday said Prime Minister Perry Christie “needs to go” because he is too old and has no innovative ideas to revive the economy, adding: “The numbers speak for themselves.”

Dionisio D’Aguilar, in a scathing assessment of the Government’s ability to resuscitate the economy, told Tribune Business it seemed incapable of both balancing the Budget by “spending less”, and growing the economy.

Warning that the current anemic growth levels would cause the Bahamas’ debt-to-GDP levels to continue to increase, the Superwash president said the Government’s only action to-date had been to raise taxes via Value-Added Tax (VAT).

Warning that this would depress, not increase, economic growth, Mr D’Aguilar said the Bahamas would find it impossible to “maintain the status quo” with all the economic indicators heading in the wrong direction.

“They need to spend less to bring the Budget into surplus, and the economy is not growing,” he told Tribune Business, identifying these two issues as the Christie administration’s greatest problems.

“If your economy is not growing, your debt-to-GDP ratio is going to continue to increase, and that’s worrying. If you can’t grow the economy and are not reducing your spending, you have to do something innovative to get the economy going.

“That’s the hard part. The Government does not know what to do to get the economy going except raise taxes, and that does not spur growth in GDP,” Mr D’Aguilar added.

“That behooves the question of why the Prime Minister, who’s 73 years-old, thinks he can come up with new ideas to grow the economy. He needs to go.

“It’s a tough job, I know that, but I think we have milked the economy, and current structure of the economy, as much as we can and it’s time to change the way we do business.”

Apart from improving the ‘ease of doing business’ and smoothing the investment approval process, Mr D’Aguilar said the Bahamas’ needed to “remove the Immigration roadblock, fight crime better” and fix a broken education system.

“Our people do not know how to innovate and grow the economy because they do not know how to read and write,” he told Tribune Business. “The poor education system is causing so many other problems - low GDP, higher crime. We can’t grow the economy with the workforce we have.”

Mr D’Aguilar said there was “too much crazy rhetoric” over the Baha Mar situation that had spooked foreign investors and scared them away.

“When people tell me I’m talking s*, I say look at the GDP numbers and explain why we’re not growing well despite the US turnaround,” he told Tribune Business.

“The numbers speak for themselves. The ease of doing business is down, crime is up, education is down, GDP is down, taxes are up, the national debt is up, and you can’t maintain the status quo.”

The Bahamas’ projected 1.2 per cent GDP growth rate for 2015 is well short of the 7 per cent that the International Monetary Fund (IMF) believes is needed to both absorb new workforce entrants, and cut the existing jobless rate by 50 per cent, between now and 2018.

And the Central Bank of the Bahamas, in its 2014 annual report, warned that the debt-to-GDP ratio had already breached the 70 per cent mark that is cited as a ‘danger threshold’, beyond which countries may lose sovereign control of their financial affairs.

Tribune Business also revealed last Friday how, despite an extra $182 million in VAT revenues for the first five months of 2015, the Bahamas’ total national debt jumped by 10 per cent in the year to end-June to hit a new $6.378 billion record.

The Central Bank’s quarterly review for the three months ended June 30, 2015, revealed that despite the narrowed fiscal deficit, this nation’s national debt continued to rise - by $58.6 million during the second quarter alone.

The data suggests that while VAT may have arrested the growth in the national debt, it has done nothing to stop it; at least in the new tax’s early stages.

This, as this newspaper predicted, has ignited further debate about how the Government should use the extra $300-$350 million it is earning annually from consumers and the private sector, and generate calls for more transparency on how tax monies are used.

Mr D’Aguilar told Tribune Business it was “no surprise” that the national debt had increased, because the Government had yet to restrain its spending and bring its finances “into balance”.

Even with VAT, the Government is still spending more than it is earning, resulting in continued fiscal deficits that are adding to the national debt.

While the projections are for the Bahamas to start producing a ‘primary surplus’ in the 2016-2017 fiscal year, and reduce the GFS deficit to just $31 million the following year, the national debt will still continue to rise. The Government also appears to be relying on increased economic growth to keep the debt-to-GDP ratio in check.

Mr D’Aguilar warned that the national debt would continue to increase until the Government “learns to live within its means” and spent less than it earned in revenues.