By NEIL HARTNELL
Tribune Business Editor
The Deputy Prime Minister yesterday pledged that the Government "will not rest on our laurels" despite the improved fiscal ratios resulting from revised GDP growth figures.
K P Turnquest told Tribune Business that the Minnis administration would not slide into "complacency" after the near-28 per cent increase to 2012 GDP estimates brought the Bahamas' debt ratios back into line with its 'investment grade' rating from Moody's.
With the Bahamas still facing "a significant debt problem", Mr Turnquest said the Government was simultaneously focused on bringing this under control and generating jobs through higher economic growth.
"It will decrease the [fiscal] ratios, which is a good thing," the Deputy Prime Minister said of the Department of Statistics' GDP revisions. "Hopefully, the credit rating agencies will recognise that and it will be favourable, but we cannot rest on our laurels.
"The challenge we have is to ensure we don't become complacent as a result of it, and recognise that we still have a significant debt problem that we have to get under control. No matter what the GDP figures are saying, it's the responsibility of the Government to raise the revenues to meet its commitments."
Mr Turnquest was speaking after the Department of Statistics said last Friday that the use of new data sources (especially VAT filings), and different methodologies, had resulted in a near-28 per cent upward revision to the Bahamas' GDP numbers for 2012
The Ministry of Finance said the new figures meant the 2012 national debt-to-GDP ratio had been revised downwards to 46.7 per cent, compared to the earlier 59.6 per cent estimate. Likewise, the direct charge on government, which strips out debts it has guaranteed on behalf of the public corporations, fell from 52.4 per cent to 41 per cent.
Using 2012 as a base to calculate the 2016 figures, the Ministry added that the debt-to-GDP ratio dropped from 80.8 per cent to a more acceptable 62.6 per cent last year. And the Government's direct debt had fallen from 72.4 per cent of total GDP to 56.1 per cent.
This brings the Bahamas' debt-to-GDP ratios into line with the 'Baa3' investment grade rating it has from Moody's, which it is desperate to retain. The rating agency has given the Bahamas 12-18 months to deliver on its economic growth and fiscal consolidation plans before determining whether a 'junk' downgrade is warranted.
Mr Turnquest said the Government remained focused on both areas, adding: "We're focused on growing the economy, and creating jobs and entrepreneurial opportunities for the Bahamian people.
"We'll continue to press forward with our expenditure control programme and Fiscal Responsibility legislation because we recognise there are two sides to this equation, and we have to be operating efficiently and optimally on both."
The Minister added that it was "so far, so good" on the Government's fiscal consolidation plan, which includes a 10 per cent 'across-the-board' cut to its $2.67 billion recurrent spending Budget for 2017-2018 and a hiring freeze in the public service.
Equal attention, though, needs to be provided to the Bahamian economy's growth - or lack of it. The Department of Statistics' Friday report confirmed that the Bahamas was in recession for three consecutive years between 2013-2015, with real GDP declining by almost $500 million over the period 2012-2016.
The contraction was also worse than the Department had originally projected, having estimated that the Bahamas 'flat-lined' with zero growth in 2013, followed by declines of 0.5 per cent and 1.7 per cent in 2014 and 2015, respectively.
The revised real GDP figures, which strip out inflation, showed the Bahamian economy contracted by -0.6 per cent, -1.2 per cent and -3.1 per cent in 2014, 2015 and 2016, respectively. Growth only returned, and marginally at that, with 0.2 per cent in 2016.
The nominal GDP figures, which include inflation's impact, also showed a -0.4 per cent contraction in 2013. This, though, was followed by growth of 1.6 per cent, 3.7 per cent and 0.2 per cent in 2014, 2015 and 2016, respectively, which took nominal GDP in the latter year to $11.262 billion.
The Ministry of Finance said the datas showed "a weaker economic outturn" between 2013-2015, "confirming that the real economy was smaller in 2016 than it was in 2012 when the PLP last took office".
Mr Turnquest yesterday said the Government's growth plans involved multiple initiatives to foster entrepreneurship, including the 'Fresh Start' and 'Jump Start' programmes, increased financing for the Bahamas Entrepreneurial Venture Fund and the 'start-up entrepreneurship centre' partnership with the University of the Bahamas.
"In addition to that we're working hard to finalise some investment proposals that will create employment, so we're working with foreign direct investment and empowering local local entrepreneurs to hopefully spur economic activity," he told Tribune Business.
The Deputy Prime Minister added that the 9.9 per cent unemployment rate "still paints a very dismal picture", with recent improvements driven by temporary public sector hiring pre-general election rather than the private sector.
"We know we have a lot of work to do to create real jobs and real growth, so that people can build careers and start businesses," he said.
This resulted in 2012 GDP, or total economic output, increasing from the original $8.4 billion to $10.721 billion. And, given that GDP is the denominator, the increased economic output means an automatic improvement in the Bahamas' debt-to-GDP and other key fiscal ratios.