The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE implementation of Fiscal Responsibility legislation is "the litmus test of just how serious this government is", the Chamber of Commerce's chairman urging: "Show us we have a future."

Michael Maura told Tribune Business that shrinking the Bahamas' $300 million-plus fiscal deficits, and getting the national debt under control, were "paramount" to restoring private sector confidence - especially among businesses "wondering whether we should continue to invest".

Emphasising that the Bahamas can no longer afford "to kick anything down the road" on urgent fiscal and economic reforms, Mr Maura said the introduction of curbs on unchecked government spending was vital if this nation is to enjoy a sustainable future.

"I think it's paramount," Mr Maura added of the Government's promised Fiscal Responsibility legislation. "It's a litmus test of just how serious this government is.

"It's critical, not just from a credit rating agency perspective and need to avoid a potential downgrade in the future, but it's critical from the standpoint of local investor and business confidence.

"People who have worked so hard to invest in and develop their businesses, and hire Bahamians, have been wondering whether we should continue to invest because of the Government's out-of-control spending," the Chamber chief continued.

"We need to know we have a future. That Fiscal Responsibility legislation will be important to know we have a real sense of responsibility on the part of government, and we're moving in the right direction. If they don't continue their work in areas of fiscal control, it would cause a real concern for us."

The Minnis administration, in responding to Standard & Poor's (S&P) decision to leave the Bahamas' sovereign creditworthiness at 'junk' status, albeit with no further downgrades, again pledged that Fiscal Responsibility legislation, including so-called 'Fiscal Rules' that act as a check on runaway public spending, will "be in place" by mid-2018.

While Fiscal Responsibility legislation typically forces governments to be more open and transparent over the public finances, and imposes greater accountability through having to return to Parliament to obtain permission to exceed previously-agreed spending limits, 'fiscal rules' provide tougher controls. They set specific targets, such as debt-to-GDP ratios, that the Government cannot breach, and are regarded as more effective in checking public expenditure.

Mr Maura, meanwhile, said he "1,000 per cent agrees" that S&P's position is one where, while impressed by the plans outlined by the Government and the private sector, it is now waiting on the Bahamas to execute and deliver the promised economic growth and fiscal consolidation.

"I think they came down, saw evidence of a sincere effort on the part of government to address policy reforms, legislative reforms, and unleash economic growth through initiatives like the Commercial Enterprises Bill," the Chamber chairman added.

"They had an opportunity to meet with the Chamber of Commerce and the private sector, which feel optimistic about what they're seeing from the Government and that it is listening to them.

"But S&P recognises there's a hill to be climbed and a lot of work needs to be done to get over that hill. They want to see evidence that the Government is making its way through difficult terrain, and the next time they're in town they will be looking for real, hard evidence that improvements in the economy are being made, including Fiscal Responsibility legislation."

Mr Maura continued: "We don't have time to kick anything down the road. We've got to pick it up and deal with it.

"We are fortunate that they [the Minnis administration] entered office with a stated objective and commitment to right-size government. We have been fortunate to see evidence they are living up to their commitment, but the real work is still to come.

"S&P has given them a bit of breathing room, just as the IMF and Moody's have done, but the next round of reviews are going to be very important and testing ones."

Mr Maura added that both the Government's National Ease of Doing Business Committee, and the Chamber of Commerce's own internal version, had put in "a tremendous effort" to develop recommendations on making the conduct of commerce - and the Government's own internal processes and systems - much smoother for the private sector.

"They've made presentations to the Cabinet, met with the Cabinet on several occasions," he added of the National committee, "and I understand the Government is in the midst of reviewing their recommendations, with the Attorney General's Office looking at them as well, to see if modifications can be made and they can be adopted."