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Minister Warns Of 'Casualties' From Fiscal Right-Sizing

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cabinet minister has warned there will be "some casualties", and that Bahamians will suffer "some pain before there's gain", as the Minnis administration tries to combat the growing fiscal crisis.

Dionisio D'Aguilar, minister of tourism and aviation, told Tribune Business that the Government had no choice but to "right size the ship" following the Christie administration's "orgy of spending" prior to the May 10 general election.

He argued that there was irrefutable evidence of uncontrolled expenditure by the former administration, adding that the new government had "only scratched the surface" with what it had revealed to-date.

Mr D'Aguilar accused the prior government of paying out "outrageous sums" and using the Public Treasury "as their own piggy bank", describing payments to consultants as a particular weak point for the Government's financial controls.

"There will be some tough decisions to be made, and some casualties unfortunately, as we try and right size the ship after the orgy of spending by the PLP government in the last months of their administration," the Minister told Tribune Business.

"We're [Cabinet ministers] all very mindful of the condition the country is in, and are trying to reduce unnecessary spending. We have to remind the Bahamian people to be patient, and that there's going to be some pain before there's gain.

"Coming off this uncontrolled spending, there's going to be some cut backs as we try and right size the ship and prevent further downgrades."

Mr D'Aguilar did not identify the likely "casualties", or how many there will be, but he was likely referring to workers hired on short-term, three month contracts prior to the general election.

Many are likely to be released when those contracts expire, and the Minnis administration is also likely to take a close look at the 6,500 persons it alleges were added to the public service during the Christie administration's 2012-2017 tenure.

Kenwood Kerr, Providence Advisors' chief executive, told Tribune Business on Friday that hard decisions would have to be made over these recruits. Based on annual salaries ranging from $14,300 to $20,000, he estimated that these 6,500 hirings could have added $130 million per year to a Government's (taxpayer) wage bill that was already over $600 million.

As for the "pain before there's gain", Mr D'Aguilar's comments could also mean a slimmer public service combined with cuts to spending programmes that the Minnis administration sees as 'pork barrel' or wasteful.

"People have criticised us for painting a picture more severe than it is, but it is not good, and thank God the Government changed and we have in place people who are very mindful of the people's money," Mr D'Aguilar continued.

"The Minister of Finance has told us in no uncertain terms that there will be no more money than is in the Budget, that we have what we have, and we have to make it work, taking the tough decisions where necessary."

Mr D'Aguilar then slammed the Opposition's vehement denials of irresponsible spending by the Christie administration, saying there was voluminous evidence to the contrary.

He added that the Progressive Liberal Party's (PLP) argument that the Government had jeopardised the Bahamas' sovereign credit rating through its 2017-2018 Budget address were really a disguised call for it to reveal no more details of the previous administration's fiscal profligacy.

"I just wish the Opposition would stop trying to frustrate the process every inch of the way, and continue making claims that they've not been irresponsible," the Minister told Tribune Business.

"What more statistics, evidence do you need. Everything points to uncontrolled, irresponsible spending that has put the country on the edge of another downgrade.

"I'm glad we're revealing the true state of the country. What the Opposition is saying; don't say anything further as it will hurt the financial standing of the country, also means don't reveal anything further about what we did."

The Christie administration added $2.2 billion to the national debt during its stay in office, a record for a five-year term. It did this despite the benefit of more than $1.1 billion in Value-Added Tax (VAT) revenues during the two-year 2015-2016 period, which generated an additional net $756 million for the Public Treasury.

This outturn led many, including Royal Bank of Canada's (RBC) top Caribbean economist, to suggest that the Bahamas' was "squandering" the benefits of the region's best VAT.

By comparison, the 2007-2012 Ingraham administration added $1.5 billion to the national debt, while the Minnis administration plans to borrow $722 million during its first year in office. If the latter outcome is achieved, the bulk of the Bahamas' national debt - some $4.4 billion out of $7.8 billion - will have been incurred in just the last 11 years.

"We've only scratched the surface in terms of fiscal irresponsibility," Mr D'Aguilar blasted of the former government. "There's examples popping up every day of: 'Oh my God, really?'

"People were paid vast amounts of money. I don't care what they [the Opposition] say. They used the Government of the Bahamas as their own piggy bank. I see the sums that were flying out - outrageous sums flowing to people."

Mr D'Aguilar did not 'name names' or give specifics when asked, possibly because these are being saved up as further political ammunition.

"They completely lost touch with the people on the streets, earning $210 a week, and these guys were paying themselves vast private sector salaries," he added.

"A major internal weakness of the Government's financial controls are these consultants. They have no limit on what they earn. They randomly pick a figure out of the sky, and it's never revealed how much is paid to them."

Mr D'Aguilar has already stirred one consultant-related controversy when he attacked the former administration's culture consultant, Ian Poitier, for receiving a $1million contract paying $400,000 per annum.

The Minister was speaking out after expressing confidence that a further 'junk' downgrade of the Bahamas' sovereign creditworthiness, this time by Moody's, would not further impact the Nassau Airport Development Company's (NAD) credit rating.

NAD, the Lynden Pindling International Airport (LPIA) operator, was forced to double its bond reserve fund from $19 million to $38 million after Standard & Poor's (S&P) downgraded the Bahamas to 'junk' status prior to Christmas 2016.

The action taken by Fitch, which rates NAD, was sparked by the perceived increased country risk as a result of S&P's action. But Mr D'Aguilar said: "I don't think Fitch would consider a further downgrade at this time.

"First of all, they've just done their assessment and, hopefully by the time of their next review, they will have seen progress by the Government in trying to operate a lean and mean government, trying to cut waste and see where we can save.

"I think it would be a little premature for them [Fitch] to do that. They need to wait and see whether we perform."

Comments

birdiestrachan 4 months, 1 week ago

what about the duty on commercial washing machine part. how does that affect the man on the Street do you know or care?

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HarryWyckoff 4 months, 1 week ago

You realize the budget changes were already written by your precious band of thieves before May 11th, right?

In fact it was first presented in 2016.

By the PLP.

With the change in duty on washing machines.

Idiot.

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Alex_Charles 4 months, 1 week ago

Birdie can you stop being a whore for the PLP for one day?

I'm not an FNM supporter but jeez man... pull your head out of that boungy

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Honestman 4 months, 1 week ago

Is this the only reason you exist Birdiebrain - to spout useless PLP propaganda? Why don't you just wander off into hibernation and let sensible people get on with delivering the country from the mess your incompetent and cheating band of politicians left us with.

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John2 4 months, 1 week ago

The government can immediately take $70 million of the $722 million it intends to borrow if it sell the Aliv shares and include retail clients, and individuals in the sales for true broadest distribution. with the cutbacks tacking place , Moody's will be impressed and cancel the down grade and maintain our rating until the economy improves because the cutbacks already announced are already saving millions.

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TalRussell 4 months, 1 week ago

Comrades! In but only 69 days in power the red regime done lost their Godforsaken orgy marbles mind's.
God, this question is for you. If the red government can't right side the ship of the state's finances - are they prepared to return back to the ballot boxes at a date to be decided by referendum?

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DDK 4 months, 1 week ago

Comrade, you and Birdie perform an out-of-tune duet! Or are you a tag team?

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TalRussell 4 months, 1 week ago

Comrade DDK, I just wish for the red shirts to provide fresh opportunities to the many thousands of the out of paycheques ordinary people with a good reason to getup on workdays to head off to reasonably well-paying jobs. You too must have greater than about you wish of some kind?

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DDK 4 months, 1 week ago

The global economy is a mess, the 1% getting richer and richer to the detriment of the 99% is unsustainable. We need to learn to deal with this fact of life. We should also by now be aware that OUR successive Governments have allowed the Bahamas to decline, basically due to the lack of sufficient good governance and an abundance of avarice, corruption and slackness straight on through the entire system. This may be the last opportunity to correct the system before we plunge into the abyss. Now is the time to stop playing the blame game and FIX THE COUNTRY!!! We wait with bated breath to hear this Government's plans to right the ship of state!

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Economist 4 months, 1 week ago

For once we are being told the truth. Other countries that have overspent, like The Bahamas, have had to suffer the pain in order to put their country on a more stable footing.

Thank you Minister for your honesty.

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