The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Hurricane Irma has reinforced “the dire need” for the Bahamas to put “its fiscal and economic house in order” before a similar storm strikes, a governance reformer warned yesterday.

Robert Myers, an Organisation for Responsible Governance (ORG) principal, told Tribune Business that Irma would have sent unemployment and the $7.2 billion national debt “through the roof” had it struck New Providence as a Category Five storm.

Describing Irma as “a serious wake-up call” for the Government, private sector and all Bahamians, Mr Myers said this nation was effectively out of time to strengthen its economy and public finances against the ravages of such a hurricane.

“I hope with all my heart that the Bahamas government has a serious wake-up call in the wake of Hurricane Irma,” he wrote on his Facebook page yesterday, pointing to the short and long-term devastation inflicted on many Caribbean islands.

“God bless them all,” he added of those nations, “and may God guide our government to recognise the dire need to steer the Bahamas back to a position of socio-economic stability as soon as truly possible.”

Expanding on his concerns in a subsequent Tribune Business interview, Mr Myers said: “What I’m saying in essence is, if Irma had had the kind of impact in Nassau that it did in St Maarten, unemployment would have gone through the roof, and the debt the nation would need to take on would be unfathomable and deadly.

“This is just a wake up call as to what we had warned about four to five years ago. The country needs to build reserves to protect against massive natural disasters like this, or another global recession, which I think would be equally damaging.”

With Moody’s predicting that the Bahamas’ debt-to-GDP ratio is likely to peak at 80 per cent, this nation has already used up the ‘breathing room’ capacity for extra borrowing in the event an Irma-type disaster strikes its major populations centres.

Hurricane Matthew, a storm of lesser magnitude, gave an idea of the type of economic damage that could be inflicted via the $600-$700 million in losses caused when it went past Nassau and Freeport in 2016.

With a $7.2 billion national debt, and averaging negative -0.3 per cent GDP growth over the period 2013-2017, the Bahamas is ill-positioned to cope with what befell Barbuda, Anguilla and the Virgin Islands last week. Both this nation’s public finances and economic growth would be potentially set back for years.

“It just highlights the urgency with which the Government needs to act on so many of the core issues that ORG has been discussing and suggesting,” Mr Myers added, suggesting an Irma-type storm would inflict “a triple whammy” on the Bahamian economy.

He explained that devastated businesses would likely have little choice but to lay-off staff while they either rebuilt or became extinct, causing a spike in unemployment. That, in turn, would cause a slump in consumer spending with the economy “grinding to a halt” apart from reconstruction activities.

And, with the Government having to provide VAT and import duty concessions to aid recovery efforts, its revenue base will be negatively impacted. In turn, its own expenditure will soar as it has to finance multi-million dollar repairs to public infrastructure assets.

“Honestly, it’s mind-boggling,” Mr Myers told Tribune Business of the consequences. “I shudder to even think about it; it makes me nauseous.

“The question is whether God is going to give us the time to get our house in order, and fiscal house in order. We were spared, and I hope that’s not in vain.

“It highlights the dire need to act, and act quickly. We don’t have five years. We have until the next event; maybe it’s a year away, maybe it’s two years away, but we know the global environmental patterns are getting worse.”

This is the third consecutive year that part of the Bahamas has been struck by a hurricane, following Joaquin in October 2015 and Matthew a year later, and Mr Myers said the frequency and severity of such storms was increasing.

“Time is not a luxury we can afford,” he emphasised. “Time is not on our side. The need to act is now. We can only hope the Government, private sector and citizens of the Bahamas understand that.”

ORG has frequently pushed governance and other reforms, such as Fiscal Responsibility legislation; public sector reform; a Freedom of Information Act; and education change as the answers to the Bahamas’ relatively poor economic performance.

“All these things matter to get the economy moving again, and taxes and the debt-to-GDP ratio in check,” Mr Myers said,”if we’re to have any chance under normal conditions.

“The fear is that we don’t know when these things are going to hit us. The likelihood is one of them will at some point in time, and I hope to God we get our house in order before that happens. It’s unnerving.”

With looting occurring on several Caribbean islands following Irma’s passage, Mr Myers suggested Nassau would have experienced similar “anarchy” and curfews had the storm scored a direct hit on New Providence.

Still, he added that the Bahamas needed to look to the short-term opportunities created by the devastation wreaked on rival Caribbean tourism destinations.

“We need to make sure that our customer service, product and quality is good, that our ‘ease of doing business’ is good, and that we’re offering tourists good service, good value and good quality,” Mr Myers said.

“There are millions of tourists unable to benefit from a vacation in those destinations that were literally wiped out. It’s horrible to benefit from somebody else’s demise, but that is an opportunity. It’s tough, and I feel very badly for all those countries.”