By NEIL HARTNELL
Tribune Business Editor
The Bahamian economy has to grow “six times’ faster than it is today” to solve the country’s debt and unemployment woes, a governance reform campaigner yesterday questioning whether it was still “a salvageable ship”.
Robert Myers, a principal with the Organisation for Responsible Governance (ORG), told Tribune Business that the Bahamas needed to achieve Chinese-style GDP growth rates to pull out of its current stagnation.
Questioning where such growth would come from, Mr Myers argued that the $4.2 billion Baha Mar project “doesn’t move the needle enough”, suggesting the Bahamas needed four-five investment projects of similar scale.
And he reiterated warnings that the Government was “spending the Bahamas into oblivion” through its ever-increasing expenditure, with the still-rising $7 billion national debt becoming a “deeper and deeper hole” to get out of.
“I think people are fed up,” Mr Myers told Tribune Business. “They see the nation digging itself deeper and deeper into a hole and, soon enough, if not already, it will be too deep to dig ourselves out of.
“It’s already too deep to get out of because we can’t grow fast enough to make that happen. GDP growth is hovering around 1 per cent; we need to have GDP growth of 6 per cent to deal with unemployment and the debt.”
The Bahamas’ annual GDP growth has averaged just 0.2 per cent over the past four years, placing it far away from this target. It endured two years of negative GDP growth in 2014-2015, with projected growth for 2016 around 0.3-0.5 per cent.
The IMF and the international credit rating agencies are forecasting GDP growth of around 1.2-1.5 per cent for 2017 and 2018, with a ‘ceiling’ of 2 per cent depending on Baha Mar’s performance.
Yet even these economic growth rates remain well below the level deemed necessary by Mr Myers, with the IMF itself having said previously that a 5 per cent GDP expansion rate was required between 2013-2018 to cut the unemployment rate in half and absorb all new workforce entrants.
Suggesting that many Bahamians were slowly coming alive to these issues, the ORG principal said every time $1 billion was added to the national debt, the required economic growth rate increased.
Mr Myers said achieving GDP growth rates comparable to China’s would be extremely difficult for small nations such as the Bahamas, given their vulnerability to external economic forces and natural disasters.
“That’s a rarity to have growth like that in an economy like this,” he told Tribune Business. “We have no manufacturing, financial services is under threat, tourism is facing competitive pressures, and we have high, unproductive labour costs.
“How do you change this dynamic? This is getting to the point where you have to wonder if this ship is salvageable.”
Mr Myers added: “I didn’t make this up; these are real statistics. The economy has to move six times faster than it is today. Where is that coming from? Baha Mar doesn’t move the needle enough.
“We need four to five Baha Mars if we’re going to rely on tourism and associated foreign direct investment. If that’s our only plan, then we need four-five Baha Mars and they don’t come along more than once every 15-20 years.”
Central Bank data placed the Bahamas debt-to-GDP ratio at just under 78 per cent at year-end 2016, meaning that the borrowings owed/guaranteed by the Government are equivalent to almost four-fifths of this nation’s annual economic output.
Adding in public sector debt not guaranteed by the Government takes this ratio to 87.4 per cent and, with total unemployment still stubbornly in double digits, and youth joblessness at 25 per cent, the extent of the Bahamas’ task is laid bare.
Mr Myers also warned the Government to rein in its recurrent (fixed cost) spending, which increased by 41.3 per cent in the six fiscal years to 2016-2017, expanding from $1.642 billion to $2.321 billion.
“There just aren’t enough checks and balances, and we’re spending ourselves into oblivion. It’s reckless, it’s irresponsible and it’s going to be our long-term death,” he told Tribune Business.
“The Budget shows it, the statistics show it, and there’s clearly a significant lack of management and vision overall for the country.
“That has got to change. It emphasises the fact that this government, and future governments of the Bahamas, have got to be more inclusive because they don’t hold all the answers. They have already shown that they don’t have the management capacity and vision to do what is necessary for the country to right itself.”
Mr Myers said the Bahamas needed leadership and vision “to really make a difference”, and added: “We’ve got to work at this stuff. It’s not a magic wand. The indicators are that we don’t understand or do what it takes.”
The ORG principal said the lack of public sector management talent was not irreversible, pointing to persons such as Simon Wilson, the acting financial secretary, who he praised for doing “a good job” in cracking down on tax cheats and trying to collect all revenues due to the Public Treasury.
“It’s not that there’s nothing positive,” Mr Myers emphasised, “but there’s not enough positives to outweigh the negatives. It’s not all doom and gloom, but we need to flip that.
“We just need more of the positives. We didn’t get here in five years; we got here in 50 years, and we have to get better people, better systems, more accountability and more checks.”
Mr Myers said elements of all the major political parties were “starting to understand the message that we’ve been shouting from the rooftops for the past two years”.
He added: “There are people from these parties that understand the severity of it. The average man and woman is fed up. They’re paying more and more taxes, and getting less for it.
“I think change is definitely afoot. The question is can it happen fast enough, and can I find enough people to make it a reality.”