By Peter Young
New Year crystal-gazing is invariably guesswork and can be hazardous. But, having been asked to provide brief comments on The Bahamas’ prospects for 2018, it was not hard to single out the economy as the issue likely to be of major concern in the coming months.
The new Free National Movement government is already being criticised for not fulfilling various campaign promises. But how it deals with the economy should be a priority, since this could dictate the future of The Bahamas for years to come – in the reported view of leading lawyer Brian Moree, QC, possibly the next 20 years. Recent significant developments include a narrow escape from being “blacklisted” by the European Union, the country’s continued “junk” status credit rating and the clear need for major fiscal and economic reform.
Since the evidence was there, it would be mindless to ignore the dire state of the nation’s finances and the unprecedented level of debt facing the incoming FNM government in May last year. But apart from a stagnant economy there is now growing pressure as well on offshore centres to become compliant with international anti-money laundering regulations in order to remain off global “blacklists”.
As a small island economy dependent on tourism and financial services and the foreign currency inflows needed to acquire the goods and services vital for everyday life, The Bahamas is highly vulnerable to the effects of external events (including hurricanes) that are beyond its control. Thus, it has no option but to comply with these regulations in a globalised economy in order to remain competitive.
The Government’s recognition of this should surely be welcomed even by the sceptics and critics. In accepting the need at the same time for urgent action to restructure the country’s economic model including comprehensive tax reform, together with liberalising and deregulating the economy with the overall aim of stimulating growth and creating jobs, it is clearly moving the country in the right direction towards sustainable recovery. Its willingness to re-examine preferential tax regimes and structures that can be exploited by multinational companies is equally a welcome step forward. The most controversial issue may be possible introduction of a corporate income tax so there will be a need for careful consultation with the private sector.
Effective management of the economy should be a top priority for any government. So far, Dr Minnis’ administration seems to be adopting the correct policies for the nation and the portents for the coming year are good.