By NEIL HARTNELL
Tribune Business Editor
A top banking executive yesterday said The Bahamas “won’t see any rebound in the economy for six months” at least as the “first wave” of loan deferral requests hits the industry.
Gowon Bowe, an ex-Chamber of Commerce chairman, told Tribune Business that the economic fall-out from the COVID-19 pandemic could “last for many months” given that The Bahamas’ core US tourism source markets still appeared to be near the peak of their infections/death surge.
He suggested that end-November’s Thanksgiving holiday likely represented the first chance for Bahamian resorts to enjoy “any meaningful occupancy”, given that the industry has now missed the balance of the peak winter season, and even that was uncertain.
Mr Bowe, Fidelity Bank (Bahamas) chief financial officer, added that this nation’s economic recovery from COVID-19 will have to take the form of a “public-private partnership (PPP)” rather than be a “government-driven stimulus” due to the Public Treasury’s cash-strapped condition and long-term consequences of loading Bahamian taxpayers with massive amounts of new debt.
“The reality is this could extend for many months. We don’t know,” Mr Bowe told this newspaper of the pandemic’s economic devastation. “All we can say is that traditionally in The Bahamas the September/October period is the slow months. The summer used to be slow, but it has picked up in recent years.
“If they’re not open by May 1, the hotels in terms of any meaningful occupancy will not see that until that until Thanksgiving..... I think we’re going to have to be open-minded, but I’m fairly confident we won’t see any rebound in the economy within six months. It will be longer than that. Hopefully between now and the end of summer we will see it bottoming.”
Mr Bowe said he had disagreed with the Central Bank’s initial focus on industry-wide three-month loan repayment deferrals since this potentially gave the impression that the COVID-19 crisis would be over within that period.
“Certainly, my disagreement was that we don’t know if it will last for that period of time, and it was giving the impression we’d be back to normal in three months,” he added. “While local elements of the economy would open up, we’re not thinking it will be three months, six months with tourism as confidence has to be restored in our primary market, the US.”
The Fidelity executive added that it was impossible to predict the behaviour patterns of US tourists post-COVID-19, and their willingness to get on commercial airlines and cruise ships and travel to The Bahamas once again. He suggested that, in the short-term at least, many Americans could instead elect to stay at home and “drive to the beaches in Florida” due to ongoing health concerns.
“The best we can do now is keep focused on developing various scenarios and plans, which I think the Ministry of Finance is working on,” he added. “This one, it’s fair to say, is not going to be a government-driven stimulus in The Bahamas.
“It’s going to have to be a public-private partnership using built-up savings and assets in The Bahamas with some government participation to structure it. We have to look at how, as a private sector and investor nation, we can put the recovery together. The Government has its constraints. It’s going to have to be very methodical, and everyone is going to have to participate in it.”
Mr Bowe said the full impact of the COVID-19 temporary lay-offs on the ability of borrowers to meet their loan repayments will start to come through by the beginning of May. He described March as “a mirage” given that most companies’ payroll had already gone through to carry employees’ to the end of the month prior to the national lockdown’s imposition.
“The numbers are going to start to pick up,” he told Tribune Business. “We’re in the middle of seeing the first persons applying, and what we’ve been spending time on is financial coaching and understanding their needs and requirements, and engaging with the customer.
“We’ve had a number of requests for extensions that are being considered on a case-by-case basis, and I imagine between now and government pay day we’ll see more of them coming in. It’s been a full four weeks; the tourism industry has effectively been off for one month.
“It’s a long journey and we can’t get ahead of ourselves now, and prohibit ourselves, from doing things down the road,” Mr Bowe added. “In reality, March for most people, the payroll had already gone through. March is not a good indicator, and we won’t know until the first week of May how much of these are ‘normal’ extension requests.
“We’re in the first month but I’d call it a mirage because it did not look problematic even at that time. It will ultimately be this month, April, when financial institutions see the first wave. We have to be careful that we don’t do something now that fails to reflect this may run for the long-term.”