By NEIL HARTNELL
Tribune Business Editor
The DNA's ex-leader yesterday urged the government to defer business licence and National Insurance Board (NIB) payments for two months to "ease the strain" on businesses and employees.
Branville McCartney told Tribune Business that the Minnis administration needed to "quite rapidly" assess what support it can provide to prevent a Bahamian economic meltdown resulting from the coronavirus-enforced shutdown of global travel and commerce.
With Hurricane Dorian already producing a near five-fold increase in this year's deficit to $677.5m, and a projected $1.5bn debt increase over the next six years, the government's headroom to combat the COVID-19 crisis appears limited. However, Mr McCartney argued that the time for action to prevent an even greater economic calamity was now.
Urging the government to protect Bahamian businesses from financial ruin and collapse, the former Democratic National Alliance (DNA) leader said: "The government ought to see what can be done to ease the burden we will all be facing.
"First, business licence payments are due at the end of this month; they are coming up next week. That is somewhere the government can look and extend the payment of business licence fees for a few months. It would be reviewed after a certain period of time, say two months."
The flip side, though, would be the further negative impact on the government's cash flow and already-weakened fiscal position. The Public Treasury typically earns around $130m-$150m in business licence fees during the traditionally revenue-rich first quarter of the calendar year, although the emergence of the coronavirus pandemic has likely undermined this performance somewhat.
Whether the government and taxpayer can afford such a concession as proposed by Mr McCartney is key, but he suggested that business licence fee payments could also be staggered rather than totally deferred to bring some relief to a private sector set to come under ever-increasing pressure over the coming months.
And, while acknowledging that it was "a double-edged sword" given the importance of social security, the former DNA leader also proposed that the Government approve the deferment of National Insurance Board (NIB) contributions on behalf of both employer and employees for a similar duration.
"For businesses that's a huge chunk," he said. "It may be difficult on the back end in terms of NIB, but the bottom line is persons may not be able to pay because of the circumstances they are in. There ought to be a suspension of those payments for two months, and it is then to be reviewed to see where we are and of this coronavirus crisis is in hand."
NIB is unlikely to be eager to agree to such a deferment, given that it is already grappling with a high non-compliance and untimely payments rate relating to due contributions, but Mr McCartney said the third element of his strategy would be to lower interest payments on loans held by both businesses and individuals.
The Central Bank has already ruled out any cut in interest rates given the negative impact this would have for The Bahamas' external reserves, which already face being depleted in the coming months due to their lack of replenishment by tourism and other sources of foreign exchange and currency earnings.
But, undaunted, Mr McCartney suggested an alternative would be for banks and other lenders to give hard-pressed borrowers - struggling amid the coronavirus pandemic - a "grace period of two to three months" where the repayment of mortgages and commercial loans would be suspended.
Most Bahamas-based commercial banks extended such a moratorium post-Dorian, and the ex-DNA leader told Tribune Business: "That goes a hell of a long way to ease the burden for persons not working or who have been asked to work without pay. That helps to ease the burden and fear of losing their home.
"I think instantly these items for businesses and the man on the street, if some of these suspensions are put in place, that could ease the strain a bit for everyone as a whole. These things need to be looked at quite rapidly as this whole thing is metastazing. I feel this is more magnified than Dorian."
Jeffrey Beckles, the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) chief executive, told Tribune Business that key private sector stakeholders held a series of discussions and meetings yesterday in a bid to develop a strategy that should be presented today for mitigating the economic impact of the coronavirus on this nation.
While declining to reveal details, as the plan and recommendations were still being finalised last night, Mr Beckles said he was "sure people will be satisfied with what's in the making" through "a very pleasant strategy".
"Give us a chance, and we'll be in good shape," he told Tribune Business. "The key for us is to have learned the lessons from 9/11 and all other external events that have occurred, and you'll see that fleshed out in a programme tomorrow [today]. There's some good people at the table."
The Chamber chief said private sector representatives first met yesterday morning, including executives from the main industries including tourism and financial services. A further meeting was due to be held at 6pm last night, and he added: "The movement is very quick. We have to put stuff before the House of Assembly."
Mr McCartney, who has multiple business interests, said his family's Wilmac's Pharmacy had been "twice as busy in dollars and cents terms" as normal. He added, though, that the schools he was involved with had been forced to close, while his Halsbury Chambers law firm was making business continuity plan provisions to work from home and connect with clients online.
The ex-DNA leader said "postponements and cancellations" were anticipated in his yacht and aviation charter interests, while lay-offs, reduced work weeks and lower salaries were likely to mean tenants were either unable to pay rent at all or in a timely fashion.
"This has a trickle down effect through the country," Mr McCartney added. "It is out of our control, but it is how we deal with it. Failure is certainly not an option."