The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

PRIVATE sector leaders yesterday said the IMF’s assessment that the Bahamian economy has “turned the corner” was slightly premature, one saying: “I’m definitely not celebrating yet.”

Both Michael Maura, the Bahamas Chamber of Commerce’s chairman, and Robert Myers, the Organisation for Responsible Governance’s (ORG) council chairman, told Tribune Business it was probably more accurate to say this nation was “turning the corner”.

Yet each emphasised there appeared to be renewed private sector optimism that had received further encouragement from the International Monetary Fund’s (IMF) verdict, while reiterating that “our sleeves should be rolled up” to deal with the numerous economic challenges that remain.

“I would say that we’re turning the corner with a sense of optimism,” Mr Maura told Tribune Business.

“I think we are in the process of turning. “Have we turned the corner? I speak to many small businesses, and they have not left the corner behind them. They would tell you that the last number of months have been challenging ones. While there is optimism, there are still challenges. Things are still tough for Bahamian businesses.”

Describing the IMF verdict as “very encouraging news”, Mr Myers backed Mr Maura, saying: “I think we’re absolutely turning the corner, and it’s very good for the Bahamas, but there’s a tremendous amount to do.

“Our sleeves should still be rolled up and I wouldn’t celebrate yet. The Government seems set and wants to talk about what we’re doing. It’s important now we get that done as opposed to talking about it.

“The Deputy Prime Minister [K P Turnquest] is definitely on the right track with expenditure and we hope that pans out, and we have a balanced Budget by 2020. That’s fantastic if we can do it, but we also need to build some reserves in the event of a global economic downturn or some form of natural catastrophe,” Mr Myers continued.

“We’ve got to keep slogging away. I’m definitely not celebrating, but it’s a good indicator that we’re turning the corner. We’re turning the corner, not turned the corner. That’s a better expression. We need to keep pushing the Government and leadership to make good on their promises to implement a Fiscal Responsibility Act.”

The IMF, in a summary of the findings arising from its two-week visit to the Bahamas in early March, said this nation has much work to do in addressing its fiscal and current account (trade) imbalances, as well as eliminating “structural bottlenecks” to economic growth. It called for a Budget “adjustment” equivalent to 2.2 per cent of gross domestic product (GDP) - some $235 million - to slash the fiscal deficit to “desirable levels”, and also urged the Government to set a “permanent deficit ceiling” equal to 1 per cent of GDP as part of its Fiscal Responsibility legislation.

Mr Maura said that while the IMF’s fiscal proposals were laudable, the Government may have a challenge implementing them given that it was still being ‘blindsided’ by liabilities and spending commitments incurred by the previous government.

“In the conversations that the Chamber has had with the Ministry of Finance, it remains apparent that the Government - up to about a month ago - was still being surprised by liabilities,” Mr Maura told Tribune Business.

“So we appreciate what the IMF is saying, and we hope that the Government’s period of discovery has ended, because if it hasn’t it will likely challenge the Government in meeting that recommendation.”

And while the IMF had called for the Government to make state-owned enterprises “self-sufficient”, Mr Maura suggested it needed to go further by embracing more public-private partnership (PPP) arrangements such as Arawak Port Development Company (APD).

“In my opinion, the only path to achieving that [self-sufficiency] is, in effect, the Government divesting itself, and it means specifically entering in some form of PPP with a proven and capable private operator to ensure we don’t find political interference in the future,” Mr Maura, who is APD’s chief executive, said.

“Using APD as an example, we are a privately-run entity that is very much self-sufficient. The Government has an ability, through its three directors on the Board, to remain involved in the planning, operations and performance. We operate as a private company, and do not find ourselves challenged with political interference. That’s proven very successful.” Mr Myers, meanwhile, urged the Government to embed fiscal responsibility in law given that successive past administrations have failed to live up to promises of prudence with the public finances.

“Talk is cheap. We want action,” he told Tribune Business. “Part of that action is to implement that in law, so the country corrects itself and opportunities present themselves to all citizens, not just those politically connected.”

The IMF also urged the Government to establish a “savings fund” - containing cash equivalent to be between 2-4 per cent of GDP - to deal with emergencies in the aftermath of a major hurricane strike.

It called for the Government to build-up such a disaster fund by setting aside funds equal to 0.5 per cent of GDP, or around $53.5 million, per annum whenever the Bahamas escaped being hit by storms or other natural catastrophes.

Mr Myers said such a funded needed to financed from government savings, rather than new or increased taxes, that further increased living and business costs in the Bahamas.

“We’ve got to gain that 2-4 per cent from eliminating the inefficiency and gaining efficiency,” he told Tribune Business. “You can’t raise VAT by 1 per cent to cover that as it will increase our costs and harm our competitiveness.

“That’s the major fault for us. Everyone coming to the Bahamas says we’re too expensive. That’s the second homeowner, the tourist. They say it’s a lovely place, but too expensive.”