By NEIL HARTNELL
Tribune Business Editor
A former finance minister yesterday warned that the speed of Abaco's post-Dorian reconstruction could be undermined by the government deporting much of the necessary workforce back to Haiti.
James Smith, also an ex-Central Bank governor, told Tribune Business that The Bahamas faced "some hard choices" over its policies towards illegal Haitian migrants given that many had previously worked in construction on Abaco and possessed the specialist skills essential to that island's proper rebuilding.
He suggested that the government "take a deeper dive" and not repatriate persons with the necessary abilities to "make a positive contribution" to the reconstruction effort, while continuing to send back to Haiti all those who failed to meet this criteria.
Those who remained to work on the post-Dorian rebuilding, Mr Smith added, should be regularised or given a status similar to those Bahamians who used to work in Florida "on the contract" agreed with the US during the Second World War.
"There are some hard choices to make because it would take longer than it would otherwise," he told this newspaper of Abaco's reconstruction. "That will not happen at the necessary pace because the policies towards the labour force that has done most of the construction in Abaco has resulted in them being repatriated.
"Some of the policies have an unintended effects. They could be more selective and take a very close look at the skilled labour used on the reconstruction. There's a way to facilitate that by taking a deeper dive. You still continue [with the deportations] but be selective in terms of those that make a positive contribution versus those that do not.
"Put those who do in the same category as many Bahamians who used to work on the fields in Florida. It's just a question of what's in the best interests of our own economy."
Mr Smith's argument is that The Bahamas should make rebuilding Abaco's society and economy its number one priority, while still maintaining the fight against illegal migration and continuing deportations - albeit in a more selective manner.
His comments are likely to arouse fierce opposition among some elements in Bahamian society, especially since Dorian and its aftermath appear to have exacerbated tensions and attitudes towards the Haitian community including those in this nation legally.
Clarence Russell, director of Immigration, recently suggested in a TV interview that a labour "contract" with Haiti - similar to the 1943-1965 agreement with the US that saw some 30,000 Bahamians work in Florida's farming fields - should again be looked at as a means to curb illegal migration while also meeting this nation's workforce needs.
The suggestion is not new, with the Government having previously sought to reach such an accommodation with its Haitian counterpart, but no agreement was ever concluded or properly implemented. Mr Smith's remarks, though, also reflect the reality that Abaco likely faces a manpower shortage for the reconstruction effort given the thousands of homes and properties that were either destroyed or damaged beyond repair.
The former finance minister, meanwhile, said it "does not take a crystal ball" to see that the Bahamian economy will effectively have to mark time in 2020 as it waits for the Abaco reconstruction to kick-in and start to bring the island's economy back on line.
Backing the Central Bank's forecast that the Bahamian economy will shrink by 0.5 percent this year, Mr Smith said the Government's increasing fiscal constraints will prevent it from "priming" gross domestic product (GDP) activity through increased public spending for some time to come.
He predicted, though, that The Bahamas was unlikely to suffer a sovereign credit rating downgrade in the near-term as Dorian's impact had already been "baked in" by the likes of Standard & Poor's (S&P) and Moody's.
"The growth prospects are very dim because of the need for reconstruction of 20 percent of our economy," Mr Smith told Tribune Business. "That has to happen first to provide some sort of platform, and added to that we still have this stubborn high unemployment rate, particularly among young people, and headwinds facing our two largest industries, tourism and financial services ."
With the ever-present threat of more frequent and stronger hurricanes, Mr Smith branded the post-Dorian recovery as "sluggish" with insurance claims failing to come through as rapidly as desired and with some settlements failing to match expectations.
"The outlook is fair to overcast for growth prospects unless something external happens," he added. "You don't need to a crystal ball to see what is happening out there. We have to kind of wait this one out."
Praising the accuracy of past Central Bank growth forecasts, Mr Smith said the post-Dorian fall-out was likely still impacting tourism bookings and producing cancellations with many potential visitors still under the impression that the entire Bahamas - not just two islands - had been flattened by the Category Five storm.
However, he conceded: "I think the Abaco economy sometimes has a greater impact that we realise. While the rest of The Bahamas attracts short-term tourists, who are are here for a couple of days or weeks, Abaco had a greater percentage of permanent tourists like you find at Lyford Cay through second-owned homes, usually by Americans and Europeans.
"Those houses, if they didn't stay there themselves, they rented them out to family and other people. Those homes are really hotel rooms, and persons staying there would have spent higher directly in the community for services and food. I think that has taken a big gap out of our GDP growth."
Mr Smith added that "the severe fiscal constraints" that the Government now finds itself operating under post-Dorian means there is "no possibility of the Government priming economy through spending. They simply don't have it".
Suggesting that this situation will prevail for at least another 18 months, he also voiced concern that the Government may experience an increase in debt servicing (interest) costs and find it difficult to access sufficient capital altogether if local and international investors became wary of its post-Dorian deficits and debt.
However, he said it was "very unlikely" The Bahamas faces any imminent downgrade to its creditworthiness as the rating agencies would have taken this action immediately after Dorian.
"I think our negative numbers have already been baked in," Mr Smith told Tribune Business. "The Government, to my knowledge, has not had a difficulty meeting its debt payments. Debt servicing has always been a priority and we're sticking to that plan. We don't have a track record of not meeting our commitments, and the rating agencies were too quick to downgrade in the past quite frankly."