The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Minister of Finance yesterday pledged that the Government “will do better” than the Bahamian GDP growth rates projected by the IMF, acknowledging that this nation’s economy had “not performed to the levels required”.

K P Turnquest, slamming the former Christie administration for four consecutive years of negative or no growth between 2013-2016, said the Bahamian economy had not grown fast enough to provide sufficient jobs for an expanding population.

The International Monetary Fund (IMF) is forecasting that the Bahamas’ GDP will grow by 1.3 per cent this year, and by 2.2 per cent in 2018, as a result of Baha Mar’s opening.

But, addressing the House of Assembly during the 2017-2018 Budget debate, Mr Turnquest said: “Going forward, real growth of the economy is expected to be restrained by the ongoing influence of structural impediments, such as the ease of doing business and skill mismatches, with the rate of growth receding to around 1.3 per cent per year at the start of the next decade.

“It is precisely these types of unacceptable and inadequate economic growth trends that are of critical concern to our Government.... We can do better than the growth rates projected by the IMF, we must do better and we will do better.”

Pointing out that total GDP output had declined or been stagnant for every year since 2012, Mr Turnquest said there were clear signs that the construction industry was struggling.

“The softness of the construction sector, as a whole, was reflected in total mortgage disbursements for new construction and repairs, which declined by almost 7 per cent, following a gain of 24 per cent in 2015,” the Minister said of the industry’s 2016 performance.

“As for the two main components of the sector, the residential element contracted by 3 per cent last year, while the commercial segment decreased sharply by 51 per cent, and this on the heels of a 35 per cent downturn in 2015.”

Mr Turnquest added that the minister of tourism, Dionisio D’Aguilar, “has some work to do” after 2016 air arrivals rose by just 0.1 per cent to 1.4 million. This compared to a 2.5 per cent increase in overall arrivals, driven by cruise passengers, to 6.3 million.

“The data unfortunately show that the level of stay-over visitors has essentially remained stagnant over the past 20 years, at or around the level recorded last year,” he said. “Such lacklustre performance is quite simply unacceptable and pales in comparison to the significant gains recorded in other major tourist destinations in the region.

“More troubling still, from both an economic and a social perspective, is the fact that our economy has not been able to generate sufficient new job opportunities for the youth of our nation. Our Government will address the scourge of youth unemployment, in collaboration with stakeholders, through specialised programmes focused on building essential job-related skills to enhance employability.”

Mr Turnquest then blasted the former Christie administration for adding $2.2 billion to the national debt during its five years in office, taking the direct government debt to $6.5 billion or 71.5 per cent of GDP despite a $756 million net revenue windfall from VAT since 2015.

“That represents a five-year increase of 23.5 percentage points, arguably the single largest run-up in public debt in the history of our nation,” Mr Turnquest said.

“The administration that we now replace may well have surpassed itself in the level of incompetence displayed in any of their previous mandates, as they managed to generate either zero or negative growth in the Bahamian economy over four straight years after the 2012 election.

“Quite astonishingly, it is estimated that the economy will still be smaller in 2017 than it was in 2012, and this despite five years of steady population and labour force growth. That is a dubious achievement indeed that may arguably be unsurpassed in the history of our nation,” he added.

“In addition, their lax management of the nation’s public finances, in large part through questionable and excessive expenditure, led directly to miss fiscal targets, sharp increases in the level of public debt and credit rating downgrades to ‘junk’ status.”