By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Government last night slammed Standard & Poor’s (S&P) decision to cut the Bahamas’ creditworthiness to ‘junk’ status, arguing that it had failed to “fully consider” growth-enhancing initiatives such as $1 billion in upcoming capital investments at Baha Mar.
In a predictable response, the Christie administration accused the credit rating agency of failing to give “appropriate weight” to developments and initiatives already underway to boost job creation and economic activity in the Bahamas.
Its statement, though, did not identify any of these initiatives by name other than the restart at Cable Beach and, when broken down, is effectively saying that all the Bahamas’ ‘eggs’ remain very much in the Baha Mar basket.
And it sought to downplay the loss of the Bahamas’ investment grade credit rating, pointing to countries such as Portugal, Russia, Bulgaria and Indonesia, which all have the same ‘BB+’ speculative - or junk - credit rating.
Expressing its disappointment with the credit rating agency, the Christie administration said: “The Government.... is of the view that S&P’s decision does not give appropriate weight to important developments on the ground, nor the Bahamas’ strong commitment to address its economic and fiscal challenges.”
Its statement, though, gave few specifics and details, and S&P will likely want to see ‘more action, less talk’ from the Government before reversing a trend that has seen the Bahamas suffer continual credit rating downgrades over the past two administrations.
Emphasising just how much it is counting on the Chinese to deliver, the Government said: “The Bahamas’ short- to medium-term prospects for placing the economy on a stronger growth trajectory are more encouraging than they have been since the recent economic and financial crisis, and it is most unfortunate that S&P did not seem to fully consider the impact of the many growth generating initiatives underway.
“There is now no uncertainty regarding the restart and completion of the Baha Mar project which, alongside the other foreign investment-related projects underway, will help to ignite growth, boost employment, improve business and consumer confidence and contribute to government revenue.”
The Government continued: “Definitive public statements have now been issued by the new owners of Baha Mar, Chow Tai Fook Enterprises’ (CTFE) Bahamian subsidiary, and almost 1,000 workers are currently on-site engaged in completion activities.
“With the first phase of Baha Mar’s opening, slated for April 2017, CTFE estimates that, starting next month, 1,500 jobs will be generated for Bahamians, and grow to 3,300 through August 2017.
“Building on the more than $100 million ex-gratia payments made to former employees and creditors, this restart comes with additional capital investments approaching $1 billion that will have significant direct and indirect impacts on the economy.”
The Government’s statement does not state, though, how many of the 1,000 construction workers currently on-site at Baha Mar are Bahamian as opposed to Chinese nationals.
And S&P’s rationale for the ‘junk’ downgrade made clear that Baha Mar is arriving too late to rescue the Bahamas, pointing out that with the multi-billion dollar development’s ramp-up set to last for most of next year, its full economic impact is unlikely to be felt in 2017.
Elsewhere, the Government gave itself a ‘pat on the back’ for the “balanced and prudent” approach it is taking to fiscal reform.
In particular, it highlighted the newly-launched VAT, Business Licence, real property tax and Customs duty enforcement initiatives, which it hopes will generate between $40-$80 million in additional taxes over the next six to 12 months.
“A strategic programme was recently launched to bring revenue administration processes, tools and techniques in line with international best practices to safeguard the revenue base,” the Government added.
“On the expenditure side, measures have been taken to rationalise spending through initiatives such as the centralised procurement of goods and services and public private partnerships (PPPs).
The Government acknowledged that the damage created by Hurricanes Matthew and Joaquin had “placed additional strain on the Government’s resources and added to the debt stock”, but it expressed hope that improved economic growth would place its fiscal consolidation programme “back on track”.
“The Government is committed to achieving a fiscal balance compatible with an affordable level of debt, and one that eventually will support a rebuilding of fiscal buffers to deal with unforeseen circumstances,” the Christie administration said.
“The debt strategy, while focusing on containing the growth in the debt stock, also includes ensuring that state-owned enterprises are more accountable.”
The Government also hailed its Mortgage Relief Programme as helping to contribute to “a resumption in bank lending”, and touted the National Development Plan as the key to addressing the Bahamas’ long-term structural weaknesses and economic deficiencies.
“Reducing structural impediments to private sector growth, and enhancing the external competitiveness of the Bahamian economy, remain key priorities of the Government,” the statement said.
“Through the soon-to-be released National Development Plan, the Government is determined to pursue, with urgency, sustainable economic reforms and responsible policy initiatives to further unlock the Bahamas’ growth potential - by way of continued investment in economic infrastructure, and reforms to improve the business environment and energy sector.”
While long on promises and commitments, the Government’s statement is light on detail, especially the ‘how to’ of implementation and execution to generate faster GDP growth and more Bahamian jobs.
Concluding its statement on an optimistic note, the Christie administration said: “The facts are compelling that the Bahamas remains an attractive jurisdiction for foreign investments/.
“It is the Government’s view that the Bahamas’ short-to medium term prospects are positive, and the immediate focus of policymakers is on ensuring that the many growth promoting initiatives underway take root and yield the expected dividends.
“As S&P monitors the impact of these various macroeconomic and fiscal measures and projects over the next six to 12 months, the Government is confident that the Bahamas will be able to secure an improved rating outcome.”
Comments
BMW 7 years, 3 months ago
They just dont get it! The S&P took baha-mar into cosideration duting their evaluation. They are complete morons!
goodbyebahamas 7 years, 3 months ago
They get it alright, right in their personal bank account. All on purpose, but what's happened is that they've been caught and don't know what to about it. In other words, all the stealing has been on purpose on their part, but the greed was so great blinding them that they didn't look around to see all the F-ing decay....LOL! And now, they need all at F-ing money they stole from us back to save the country and their F-ing asses. LOL, but they've either spent it, can't expose where it is(Thief), or just won't give it up no matter what the hell happens(I'm betting on the third reason; PLP's greed is always a reliable bet). LOL....I wouldn't be surprised if these a$$holes start leaving the country in the wee hours of the night, Lord knows they can afford private jets.
Greentea 7 years, 3 months ago
Dear Government, Shut ya azz and get a clue. One poorly planned and poorly built resort when a country has made ZERO provision to power it does not transform the economy. You didn't read the article in the Wall Street Journal eh? Try addressing the other things tanking the economy, like crime, that unstable power grid, piss poor education, corruption, cronyism, lack of transparency and accountability. If you have to play surprised, dumb and outraged about this, you clearly have no business managing an economy. GTFOH. Greentea
bandit 7 years, 3 months ago
The IMF soon coming to take over the economy.
Economist 7 years, 3 months ago
The government thought that they could hold this off until after the next election.
Now they have to worry about the devaluation of the Bahamian Dollar, though that is unlikely to occur for several months.
Sickened 7 years, 3 months ago
Lord forgive me but the ONLY words that come to my mouth when I think of the downgrade are curse words and violent words. This government has got me hot up! I used to be such a proud Bahamian. Now I just tell people that I'm from the Caribbean. Fucking sad!
banker 7 years, 3 months ago
The PLP do not understand the law of diminishing returns. It simply states that you have to throw more and more money into something and for that you get less and less returns.
Spending a billion dollars to get Baha Mar going will not affect the economy at all. The workers are Chinese, the money is Chinese and the owners are Chinese. Nothing will stick to the local economy. And knowing the history of construction -- the rice-poopers will not finish when they say they will. They haven't finished a damn thing on time. And when and if they finish it, there is no guarantee that the hordes will come to fill it. That well has been poisoned. Read all of the forums of people who reserved Baha Mar the first time around. Weddings were ruined, holidays were ruined and the Bahamas got a black eye. No one is going to trust Baha Mar again -- especially for an expensive holiday that is not worth the money.
I am still taking bets that Baha Mar will not open when they say it will.
Economist 7 years, 3 months ago
I agree with Banker, Baha Mar won't save The Bahamas. The government MUST reign in spending or we are doomed.
MonkeeDoo 7 years, 3 months ago
The Government is not going to rein in spending until they have to ask the IMF for a bailout. That is when Asa Pritchard and other wholesalers can no longer get foreign currency to but grits and corned beef. This is nothing new - Jamaica has gone through the same thing. Can anyone imagine a Blue Marlin worth less that I red US cent. Coming to an island near you soon for being so fu....g stupid,
Continue depreciation of JMD, says IMF - McPherse Thompson Assistant Editor - Business The International Monetary Fund (IMF) said Jamaica's commitment to continued depreciation of the exchange rate will be crucial to maintain competitiveness in the face of large inflation differential with the country's trading partners. The advice was made by the IMF staff team which undertook the last quarterly review of Jamaica's economic support programme and contained in a report to the executive board which met in September and approved the ninth review. The Jamaican dollar traded above $119 to the US dollar for the first time on Tuesday and has since continued on its march towards $120.
alfalfa 7 years, 3 months ago
Finally, Perry and Michael should begin to realize that, unlike the Bahamas, their are entities that they cannot B/S. The S--t has hit the fan and if our dollar is devalued we may witness upheaval like none other before. Let him shuffle his way out of this one. Watch for a VAT increase as part of his ingenious solution.
OMG 7 years, 3 months ago
Who could ever believe anything that Christie says. Had they cut expenditure and used the VAT and other tax increases to pay of the debt this could have been avoided. Here on Eleuthera there is a noticeable lack of tourists, Restaurant prices already extortionate also reflect a 25% rise due to 18% service charge and 7.5 % VAT, Kids are not eating properly in many homes, poverty is on the rise and nobody in power really cares.
goodbyebahamas 7 years, 3 months ago
This breaks my heart reading this, Eleuthera is F-ing beautiful, there is no reason it shouldn't be a gold mine. I tell you friends, the only way is to march and demand your F-ing money, you have to unite and march like the USA did against Britain in 1776. You have to have the same logic and spirt those revolutionary did, Live free, or die, otherwise you will be oppressed all your lives. Kids are suffering you PLP MF-ers reading this, not eating properly, enjoy your material possessions now you PLP MF-ers, because you greedy evil MF-ers will burn in Hell.
sheeprunner12 7 years, 3 months ago
But .............. nobody knows what is in the secret Bahamar deal........... its locked up in the Supreme Court ............... smh
S&P and Moody's have tried hard to help The Bahamas, but Perry & the PLP are too crooked
The OECD will be happy to see The Bahamian squirming for its economic life .......... is that why Perry is in bed with the Chinese????????............ Devil vs deep blue sea
C2B 7 years, 3 months ago
So basically the argument is.... "We are not junk! We are just above junk!" Very compelling indeed.
ThisIsOurs 7 years, 3 months ago
I hold firm to the belief that they looked at the 400,000 paid for those hideous decorations and decided downgrade immediately. They probably forgot about Bahamar, and just added it in the report as an afterthought
concernedcitizen 7 years, 3 months ago
Do these clowns think S and P did not see the nearly half a billion dollars that walked out the front door of BOB ..Of course they know Sand P saw it they don,t give a rats a@@ ..These are despots and like those African leaders where people survive on a dollar a day ..How bagman Bethel can stand up in that church is beyond me .In 40 odd years these f@@@k heads turned the jewel of the region in to a sh@thole ..
gbgal 7 years, 3 months ago
Word on the street here is the government has already prepared for devaluation but instructed financial entities to keep plans secret until after election! No longer will our dollar be pegged to US $ as ours will be worth 50percent less. We are done. Happy Christmas!
MonkeeDoo 7 years, 3 months ago
Happy Christmas ???? We already have a banking crisis due to real estate values and marketability being zilch. Now Bahamians with any amount of cash will wake up to find it can only buy half of what it could buy yesterday. Not only that but the capital market ( BISX ) will also founder because the shares that you have will only be worth half of what they were worth the day before. And if anyone thinks that the Government Members will be in the same boat you can forget that now. Their money is already outside the Bahamas in US Dollars. Why does anyone think that they prefer to contract with foreign suppliers ? Eight million dollars for a piece of software for Road Traffic ? There is no way in hell that it could cost that much. So who got the handshake ? Hanna Martin no doubt.
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