The Tribune

By TANYA SMITH-CARTWRIGHT

tsmith-cartwright@tribunemedia.net

A LOCAL economist is urging people to create feasible budgets in a time when economic recovery might be 18 to 24 months away due to the COVID-19 pandemic.

As cases continue to surge at home and overseas, Bahamians are also grappling with the economic fallout from the crisis. Thousands of hotel employees and workers from other sectors have been temporarily laid off since March and it is unclear when they will return to work.

In these uncertain times, Rupert Pinder says proper budgeting is key.

“The first thing that everyone has to do is create a budget,” Mr Pinder advises. “Firstly, look at your intake to include welfare and unemployment, by that I mean whatever is coming in. “Secondly, look at your needs and necessities. You have to find a way to strip all things that are luxury and focus on those things that are your basic needs.

“Given that you are looking at 18-24 months for any sign of recovery, even those who have money saved have to be careful how they spend their money. So that luxury of a rainy day fund or a buffer (a minimum of a four-six months of savings) also needs to be budgeted. You cannot continue with business as usual in terms of your spending habits.”

He says priority spending should go to food, communication, healthcare, transportation, utilities, and housing.

“You might have flexibility in reprieve in terms of mortgages and rent. For persons who have loans, particularly those with good credit history, they want to use this opportunity to have a candid discussion with their bankers in terms of what sort of concessions can be given - deferral of credit commitments. You should not run away from your banker.

“In the absence of a vaccine we might be looking at a recovery from 18 to 24 months,” he added. “It is expected to be a lot deeper than the Great Recession, as it has impacted all of the sectors – retail, financial, travel, etc. The downturn, however, is expected to be a shorter time. You also have to start thinking, ‘if this recession goes on over 24 months’, you still need to have a little cushion in terms of finances.”

Mr Pinder, an economist at BTC who has worked at the Ministry of Finance in the past, said the government will also need to retool the national budget, suggesting more money go towards welfare.

“Retooling in respect to the budget is needed,” Mr Pinder said. “For example the constituency allowance is about $4 million in the budget. That money should be placed in a central pool to help with welfare provisions. Some constituencies might have less need than others. That will be $4 million to help with inner city people where the needs will be greater. There is probably a need to look into cost rationalization. People are working from home. Do we really need to lease that office space? The same thing applies with government vehicles. They are all parked now. Are they all needed?

“We also need to rationalize in areas of duplication. . .do we need some of these services to be provided at this time? One of the areas I have not heard about publicly, not saying it’s not being done, is expenditure cuts. In this economy you obviously don’t want to send people home. We also need to look at ways to get revenue in a bad economy.”

Mr Pinder is a graduate of McGill University in Montreal, Canada where he attained a Masters degree in Economic Policy Management.