By NEIL HARTNELL
Tribune Business Editor
The government “doesn’t have the headroom” to rescue the Bahamian economy from the coronavirus crisis through a package of tax cuts and waivers, a governance reformer argued yesterday.
Robert Myers, pictured, the Organisation for Responsible Governance’s (ORG) principal, told Tribune Business that The Bahamas would simply have to rely on the existing tools provided by the National Insurance Board’s (NIB) unemployment benefit and sick pay to protect its citizens from the sharp recession it likely faces due to the pandemic.
He said the government, through the Public Treasury, simply had nothing more to give in the form of tax breaks and other relief given the post-Dorian fiscal crisis that emerged several months before anyone heard of COVID-19.
Mr Myers added that The Bahamas needed “to get back from the fiscal cliff rather than lean further over it” given the projected near five-fold increase in the 2019-2020 fiscal deficit to $677.5m, and $1.5bn rise in the national debt over the next five years.
Arguing that the coronavirus pandemic “will pass”, he said the government already had enough to grapple with given the increased medical costs it will incur to test, contain and treat the coronavirus.
“I don’t think the government can provide any. They just don’t have the funding for it,” Mr Myers replied, when asked by Tribune Business whether the government had little choice but to offer a fiscal stimulus package to prevent numerous Bahamian businesses from failing and the resultant loss of thousands of jobs, which would threaten to tank the whole economy.
“They just don’t have the headroom,” he reiterated. “Any dollars you don’t pay the government now means you put it at greater risk. It’s just that simple. The government is broke. They don’t have any funds to give you. Anything they do in that capacity puts the government further into debt, and moves us closer to the fiscal cliff or pushes us over the fiscal cliff.
“Who are we trying to kid here? We’re already in bad shape. We’re leaning over the fiscal cliff, and we have to try and get ourselves back in rather than leaning further out. There just isn’t any headroom. This thing [the coronavirus] will pass. The Government is going to have enough expenses on its own with medical costs.
“The Bahamas already has a far more liberal labour policy than the US with sick pay and unemployment benefit. We need to start with what is existing. NIB is going to have to pay. That’s what we pay it for. I don’t see the need for the Government to extend themselves any further beyond covering the hospitals and the clinics.”
Mr Myers argued that The Bahamas’ fiscal priority should be escaping its “very dangerous debt crisis” once the coronavirus pandemic had passed, especially given that interest payments will hit $400m by the 2020-2022 fiscal year.
“We just need to keep things as tight as possible and hopefully not have to go into massive borrowing for this as we just don’t have it,” he added. “There’s no more can to kick. We’ve done kicked the can into a dead-end cul de sac. Now we’re going to have to turn around and kick our way out of it.”
Mr Myers echoed Sir Franklyn Wilson, the Arawak Homes and Sunshine Holdings chairman, in arguing that the Government needed to re-purpose expenditure from its existing Budget to combat the economic fall-out from the coronavirus crisis as opposed to undertaking more borrowing when it simply did not have the capacity to absorb it.
“The writing is on the wall,” Mr Myers told Tribune Business. “We have to pay for it from existing expenditures. Find cut backs and get it from elsewhere. This is about taking from Peter to pay Paul. The goal is not to get into more deficit spending.
“The Government has to rob Peter to pay Paul, and find that money elsewhere in its budget and live within its means. Otherwise we’re going to go down in flames. We just can’t keep doing what we’re doing. The rating agencies have put a shot across our bow. We cannot have reduced GDP and more deficit spending, and not think we have to change. We have to smarten up.
“We have to look internally, fund funding and be more efficient. The only way this turns is if the Government takes efficiency and productivity seriously. It’s very clear to any clear thinking person that the Government has to start taking responsibility for its situation. They are the 5,000 pound gorilla in the room.”