By RASHAD ROLLE
Tribune Senior Reporter
DEPUTY Progressive Liberal Party leader Chester Cooper said the Minnis administration’s current budgets for unemployment, food, rental and social assistance during the COVID-19 crisis are “woefully understated” and should be aggressively increased.
His assessment features in a personal plan released this week outlining ways to help the country during and after the crisis.
Some of the brightest economic minds and members of his parliamentary caucus contributed to the plan, he said.
Warning The Bahamas faces a severe recession, he said how the government responds will determine the severity of the recession or whether it becomes a depression.
He expects that public debt will increase dramatically in the next 12 to 18 months, reaching a debt-to-GDP ratio of over 100 percent “from the current level”. He further forecasts a funding need of between $1 billion and $2 billion to keep the economy afloat.
“The government should take $250 million and invest immediately in real food security. BAMSI is a good model but Andros is primed for growth in agriculture,” he said.
He called on the government to encourage BTC and Aliv to boost bandwidth for free for people who need to work at home for 60 days, offering tax credits and subsidies to facilitate this.
He said the government should also immediately facilitate free online interactive courses via BTVI and UB to strengthen the labour force during this time.
To attract tourists when the COVID-19 crisis fades, Mr Cooper said the government should offer aggressive incentives, including reduced taxes on airline tickets for a six-month period and the removal of certain VAT and/or hotel room rates for the same period.
He said the government should cut its recurrent expenditure, eliminating inefficiency and waste in ways that go beyond “lip service to cutting overall expenses by ten percent”.
“Low-hanging fruit would to restrict local and international travel over the next year, purchases of new vehicles and eliminate discretionary, non-essential expenditure,” he said.
“The savings maybe re-purposed to support an enhanced budget for unemployment benefits, social assistance and support for the domestic economy. Review of all consultant contracts to ensure no double-dipping. That is, collecting a pension and consultant salary at the same time.”
The Exuma & Ragged Island MP said the government should provide value-added tax and other tax or loan credits to all businesses to retain as many employees as practical and to ensure quick release of money to employees while removing some administrative strain off the National Insurance Board, which can then concentrate on self-employed people.
He also wants the government to appoint a debt management committee to review and recommend advice on managing and structuring the country’s debt.
Mr Cooper said the government should seek to issue up to $1 billion in bonds over the next year that could be called COVID-19 relief bonds in order to reduce government cash outflow in the short-term.
“These bonds should be targeted to specific projects, for example, food security/BAMSI expansion or technology and e-commerce to provide efficient management of and service delivery to our citizens,” he said. “Issue medium-term COVID bonds with a maturity date of up to ten years. These bonds will have a coupon and will be targeted at retirees looking for income to live on. This issuance will be $150-$200 million. Issue short-term bonds up to five years, targeted at banks as they invest excess cash in the system. This issuance would be up to $500 million.”
He also said the government should borrow $750 million in US currency for budget support, using substantial portions to prepay debt that will soon come due.
“Use the powers under the Financial Administration and Audit Act to get dividends from cash-rich organisations including the Bahamas Maritime Authority, URCA, Central Bank, the Insurance Commission, etc,” he said.
Once the COVID-19 health crisis subsides, Mr Copoer said the government should review loss-making quasi-government enterprises with a view to finding “private sector-styled strategies” for them.
“Enterprises such as Bahamas Power and Light, Bahamasair, Water & Sewerage Corporation and ZNS should be scrutinized, thus freeing up over $100 million in annual subventions in addition to freeing up over $750 million in debt and hundreds of millions in future pension obligations, while allowing for reduced cost to the consumers, which would allow for more discretionary spending, hence increased economic growth for all,” he said.
He added a new Sovereign Investment Fund should be created by initially transferring the government’s private sector investments like Aliv, BTC, Cable Bahamas and Bank of the Bahamas.
“The government may systematically reduce its holding with the orderly sale of shares to Bahamian investors of all sizes,” he said.