By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Politicians “have no business being in power” if they fail to address the Bahamas’ fiscal peril, a reform advocate warned yesterday, adding that another Matthew-type hit could produce a 115-120 per cent debt-to-GDP ratio.
Robert Myers, a principal with newly-formed civil society group, the Organisation for Responsible Governance (ORG), said Matthew had delivered the ultimate incentive for the Bahamas “to get our fiscal house in order”.
With the Government facing a balancing act between financing disaster relief and avoiding a ‘junk’ creditworthiness downgrade, Mr Myers argued that aspiring politicians did not deserve to be elected if they failed to address the Bahamas’ fiscal woes - and a plan for tackling them - during the upcoming election campaign.
Emphasising that the country would “have been in real trouble” had Matthew scored a direct hit on Nassau, as opposed to its eye passing some 15 miles away, Mr Myers added that the “failure to save for a rainy day has come upon us”.
He told Tribune Business: “We’ve got to get our house in order before we have one of these massive events. If we have a global recession or a Category Four or Five storm hits Nassau, our debt-to-GDP could go to 115-120 per cent.”
The Bahamas’ debt-to-GDP ratio, as measured by the Central Bank’s revised 2016 second quarter report, currently stands at just below 75 per cent - a figure that is still in excess of the 70 per cent ‘danger threshold’ established by the IMF.
With Hurricane Matthew having inflicted a $600 million repair bill, according to Prime Minister Perry Christie, the Government’s Budget projections and medium-term fiscal consolidation projections have been massively thrown off.
The Christie administration has already been forced into $150 million of unanticipated borrowing to finance Matthew-related infrastructure and public building repairs, plus assist uninsured Bahamians and small and medium-sized (SME) businesses.
Mr Myers, meanwhile, echoed the concerns of others in the private sector in questioning what the Government has been using its Value-Added Tax (VAT) revenue windfall for, given that it has still been running deficits and increasing the national debt.
“None of that went to pay off the $6 billion-plus debt,” he told Tribune Business, “and they have no provisions for this type of event.
“They continue to spend; it’s just reckless. We’re not anywhere near any kind of fiscal headroom or provisioning for a rainy day. It has now come upon us.”
Suggesting that Matthew had produced “the strongest winds New Providence has seen in 50 years”, despite being just a Category Three or Four storm, Mr Myers said it was “a God send” that the storm’s eye did not move over Nassau directly.
“If that had gone over Nassau, we’d have been in real trouble,” he added. “Thank God Nassau was 10-15 miles away from the eye wall and the centre of the storm. We were lucky.”
Still, Mr Myers emphasised that Matthew and its aftermath had delivered probably the strongest warning yet that the Bahamas needed to repair its fiscal balance sheet.
He suggested that should a similar catastrophic disaster strike in the near future, be it another powerful hurricane or global economic depression, then the Bahamas would be struggling to find the financial resources to survive.
“It’s another sign that we’d better start acting responsibly or we’re going to meet our fiscal peril,” Mr Myers told Tribune Business. “That message is now more evident than it has been before.
“We’re seeing what that destruction looks like, and the impact it will have.”
He implied that Matthew should act as a wake-up call to politicians from all parties that fixing the Bahamas’ fiscal problems should be among the top priorities in the general election campaign.
“We’ve got to get leaders in power that understand the importance of righting the fiscal ship,” Mr Myers told Tribune Business.
“If they’re not talking about that on the campaign trail, if that’s not high on their agenda or their manifesto, they have no business being in power. If not, it means they care not for the economic health of the country, and we want no part of it.
“If the constituents and voters don’t understand that, they’ll get what they deserve.”
Comments
observer2 7 years, 6 months ago
Fiscal peril is unfortunately only the tip of the iceberg. Add to this:
I could go on and on but I will stop there.
OMG 7 years, 6 months ago
Absolutely a bunch of amateurs running this country. They should have been prepared years ago given the geographical location of the Bahamas. I bet that there will still be no clear cut draconian plan to get things back on track. What a pity that grass root Bahamians have absolutely no idea of the precipice that this country balances on and how todays expensive cost of living will seem cheap compared to what will happen with devaluation and downgrading. Unfortunately the politicians use this ignorance to their advantage.
realfreethinker 7 years, 6 months ago
Well I guess he will blame this year's budget shortfall on the " hurricane" Our country is in trouble with this crew, We have the fox guarding the hen house " Hurricane relief czar " Shame Gipson" wink wink We are trully F..KED.
asiseeit 7 years, 6 months ago
The politicians who supposedly serve this country suck donkey balls, they are failures! This country has gone backwards since independence due to nothing more than our shabby politicians and their corrupt and criminal doings. The politicians of this country are the problem and they should hang their heads in shame or be in Fox Hill.
MonkeeDoo 7 years, 5 months ago
Asiseeit: Fox Hill is the only option for them. They do not know any SHAME because if they did they would desist.The ignorant Bahamian people are their Concubine and they are sticking it to them with every move they make. And you know what sticking is right !!
John 7 years, 5 months ago
Until and unless there is fiscal prudence and accountability, the Bahamas will continue to face financial perils and including excessive borrowing and budget shortfalls. Case in point: during the 1980's and early 1990's the Bahamas had booming economies. In fact the legitimate economy was so supported and sustained by the underlying drug and human trafficking subcultures that even when a recession passed over the economy it barely impacted a Bahamians' way of life and standard of living. In fact, for most people, a depression in the economy only reduced the amount of money that person could save. Likewise with the Bahamian government. Despite the extra millions of dollars it drew in from the sub economies, The government continued to borrow money and to splurge money like two drunken sailors. And while there were a few people who sounded the alarm, even constantly, and warned that borrowing was growing out of control and tough economic times may be ahead, no one paid them any mind. Money was flowing all around and borrowing was easy and cheap. So the government continue to squander and throw away the people's money and "getting value for tax payer dollar' was a foreign language. One that was never understood, even in the least. And so now the liquidity has dried up. Tax dollars are harder to come by, borrowing is more expensive and more difficult and rather than have reserves or at least a paid down national debt, government is up to its ears in borrowing. Some say over da edge (over leveraged). And one of the few options it has available to it is to tax the Bahamian even more. Despite increasing and/or enforcing old taxes, new taxes have been introduced. But this did not quench the government's insatiable thirst for more money. More tax dollars. Poor bahamians!
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