By NEIL HARTNELL
Tribune Business Editor
The Deputy Prime Minister has slammed the Opposition's leader for raising fears of a "double-dip recession", arguing that the Bahamas had endured negative growth for the past five years due to the former administration's "ill-advised policies".
K P Turnquest told Tribune Business that Philip Davis should be the last person to talk of recession until "he can explain and justify to the Bahamian people what they did" between 2012-2017.
Mr Turnquest, who is also minister of finance, hit back as he defended the Minnis administration's decision to seek a 10 per cent across-the-board cut in government spending beyond the 2017-2018 Budget allocations.
Emphasising that the Government would "not do anything to harm the economy", he said the Bahamas was "drowning in unnecessary expenditure" via a $2.676 billion recurrent Budget that was "sucking capital" away from the private sector and ordinary citizens.
Mr Turnquest said it was essential that the Government bring its runaway spending under control if its fiscal position was to properly benefit from Value-Added Tax (VAT) and other revenue reforms, while simultaneously freeing up the private sector to generate faster GDP growth.
And, when it was suggested that a 10 per cent cut would be hard to achieve, due to 80 per cent of the Budget representing fixed costs that were 'baked in', the Minister replied: "No one said it was going to be easy."
While any extra savings are unlikely to make a significant dent in the Government's $722 million approved borrowing, Mr Turnquest said there would be a considerable reduction in the projected $323 million deficit for 2017-2018 if the target is hit.
Mr Davis and the Progressive Liberal Party (PLP), though, argued that the potential $267.6 million spending reduction - should the Government achieve its goal - threatened to cause too much economic disruption.
They argued that such austerity measures could tip the Bahamian economy into recession, and accused the Minnis administration of having no growth plan.
However, Mr Turnquest blasted back: "He [Mr Davis] needs to look at the last five years if he wants to talk about recession, and that's backed up by the numbers.
"We've been in recession for the last five years, and been in recession because of the ill-advised policies of the previous administration."
Tribune Business revealed back in April how International Monetary Fund (IMF) data showed the Bahamas had endured zero or negative growth for four consecutive years between 2013-2016, a period that covered most of the former Christie administration's term in office.
Apart from 0 per cent growth in 2013 and 2016, the Bahamian economy contracted by 0.5 per cent and 1.7 per cent, respectively, in 2014 and 2015 despite ever-increasing spending by the previous government.
"You can't spend money to save money. It doesn't work like that," said Mr Turnquest, adding of Mr Davis: "When he can explain and justify to the Bahamian people what they did, then he can talk.
"We're focused on our programme, and won't be deterred by the noise in the marketplace."
Should the Government slash its 2017-2018 fiscal year spending by $267.6 million, that would eliminate almost 83 per cent of its projected $323 million deficit, cutting it to $55.4 million.
Achieving that goal would require other estimates to hold, including revenue collections, but the Minnis administration is showing clear signs of its intentions to achieve something no other government has done.
"We don't want to suggest to anybody that the savings we intend are easy," Mr Turnquest told Tribune Business. "We are committed, and committed to putting in the work, and making the sacrifices as necessary in order to achieve.
"We are making sensible, rationale decisions. We are not about to do anything that is going to harm the economy. We have a prosperous country; however, we're drowning in unnecessary expenditure and have to get that under control.
"You're actually sucking capital out from the private sector and putting it in the public sector, where we know it's a one-way street, so you don't get the benefits of that capital to increase wealth and increase capacity in the general economy."
The Deputy Prime Minister said success with its planned spending cuts was unlikely to significantly reduce the Government's $722 million borrowing requirement, given that much of this - at least $400 million - was required to pay bills and commitments from the previous fiscal year.
"We'll see how this pans out," he added, "but we hope to recover the savings we need, which will reduce the need for new borrowing and set us up for 2018-2019. That's the hope."
When asked whether the Government had committed to a 10 per cent spending cut in return for Moody's holding-off on downgrading the Bahamas' creditworthiness to 'junk', Mr Turnquest replied: "Not at 10 per cent.
"What we committed to is looking at all expenditure and rationalising the programmes we have to ensure the expenditure we have is in line with the Government's priorities, or is a programme that is going to bring benefits."
Mr Turnquest acknowledged that change would be "an uncomfortable position" for some persons, but said the Government would "certainly try to honour every commitment" it has made - including with the public sector trade unions.
"We don't believe in padding the civil service to pick up the slack," he told Tribune Business, "so as we find excess capacity we will deal with it.
"Those double dipping or outside the scale of the civil service, we'll have to renegotiate those or take whatever action we have to do to ensure we bring the wage bill back in line."