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Budget must be creative, warns Bowe

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Gowon Bowe

By LEANDRA ROLLE

Tribune Staff Reporter

lrolle@tribunemedia.net

A FORMER Chamber of Commerce chairman said yesterday the government’s 2020/2021 Budget will have to be creative with its limited resources amid the COVID-19 crisis.

Gowon Bowe said as a result of the economic fallout from the virus, the government will either have “to reduce its spending or increase its borrowing.”

Acknowledging the government will have difficult decisions to make in the days and months ahead, Mr Bowe said the Minnis administration will have to become innovative in terms of expenditure “with the limited resources that it has.”

This, he said, includes limiting the amount of loans and grants given to businesses in the country.

He said: “…The government has traditionally seen itself as. . .a provider as opposed to a facilitator and that mindset shift has to move to well as opposed to providing business loans or business grants, can the government look at it in terms of saying ‘well if I know I’m going to spend x amount of money, can I start at advance sales or advance payments.’

“…I think the (government) has to become creative now in terms of ‘well how do I use the money that I’m going to expend in a manner that allows businesses to advance receipt of funds to, if you will, fund themselves’ and therefore, it doesn’t increase the amount of borrowing I will have to do because I was going to spend that money in any event.”

“So, when I start looking at where I’m going to borrow money, that should be in the areas where I can start seeing (investments) in the economy, but not using the cliché invest.”

He continued: “…So, for example, they’ve spoken about significant expenditure on airport developments. Well, (I would) focus on those airports able to generate revenue once borders open. I don’t focus on those airports that will not be.

“If I’m thinking about government building infrastructure, how do I develop buildings etc, that will become rental properties so I will no longer occupy 100 percent of it and allow it to (become) dilapidated.

“I will become effectively an investment property owner, 50 percent of it will be leased out to private tenants and therefore, that will serve two purposes – keep me on my toes in terms of maintaining the building but more importantly provide a cash flow again to help send some of the cost related with the borrowing that I will take on board.”

With tourism being the country’s leading industry for so many years, Mr Bowe also warned about the risks that come with diversifying the economy.

“We have to be careful about rushing to the government about diversification because I think a lot of persons fail to appreciate what tourism represents for us,” he told The Tribune.

“It is an export to a customer base of like I said seven million people, which is equivalent to probably two million full time residents.

“It is a source of foreign currency so it is our US source, if you will, in terms of the money that we have but most importantly, it is, if you will, a consumer of most of the businesses that have been established, whether directly or indirectly.

“So, when you talk about diversifying the economy, it’s not saying you don’t have other elements we should be considering, but do we have a product or a service that is going to reach two million people in the same way.”

On Sunday, Prime Minister Dr Hubert Minnis said the budget his government will issue this month will reflect decisions Bahamians will find painful as COVID-19 and the response to the virus causes the unemployment rate to skyrocket and tax revenues to plummet.

Comments

Clamshell 2 years, 4 months ago

No prob. We specialize in “creative” budgeting.

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Honestman 2 years, 4 months ago

I don't envy government on this one. How do you set a budget for the next 12 months when, in all likelihood, there will be little or no tourist dollars flowing into the country for the rest of the year, and maybe for the first half of next year? We need a bail out from someone and, realistically, only the USA has a reason (strategic) to helps us. In the meantime something has to be done to correct the huge strain on the pension fund. It was creaking even before the pandemic.

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Clamshell 2 years, 4 months ago

It’s been a long time since the Bahamas was of much strategic importance to the U.S. Mr. Trump has yet to confirm an ambassador, after 3 years, and Mr. Obama’s was an empty-headed political fundraiser who was seldom here.

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ThisIsOurs 2 years, 4 months ago

"but do we have a product or a service that is going to reach two million people in the same way."

Hands down you're talking about a technology product. They can reach millions, are scaleable and the work and resources involved do not need to grow exponentially with the amount of customers serviced. That's where part of the the profits come in.

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DDK 2 years, 4 months ago

How can anyone that professes to be of sound mind even mention the word "borrow" around the PM and/or the Deputy PM?

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The_Oracle 2 years, 4 months ago

Borrowing US funds to shore up a lack of foreign reserves with no replenishment in sight and now way to repay aside with banana leaves is by definition, suicide. Understand, tourism is a cash crop. U.S. cash. They bring it and spend it. You need another U.S. cash crop to replace it with. An export. be it a service or tangible.

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ThisIsOurs 2 years, 4 months ago

a technology product based on a sound idea that appeals to a global audience is an export product

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BahamaPundit 2 years, 4 months ago

Cannabis is the only close option and that still isn't a game changer. But it should have been done yesterday!

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sheeprunner12 2 years, 4 months ago

How do you make the Bahamian budget creative????? …….. Cut 30% of unnecessary Government jobs and send home ALL who are 55 or served 30 years in the civil service …….. Cut the Cabinet posts from 20 to 12 .............. Sell off or liquidate at least 10 unnecessary state-owned enterprises …… set up $100million with some PPPs to mine salt, sand, forest trees and fish products ……… Use BAIC to launch SMEs in agriculture & fisheries and canning/processing ……… Stop the imports of at least 50% of foodstuffs that the country can grow ……….. Build Govt facilities and stop paying exorbitant rents and consultancies ………. That should cut the Govt budget/FX expenditure by at least 50% from the 2020-2021 Budget ………. That is what the PM called GRIM.

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ThisIsOurs 2 years, 4 months ago

I'm thinking cutting govt workers also results in a greater burden on social services and less money in the economy. Less people able to buy food, pay bills or subsidze businesses.

Not saying there shouldn't be some level of redundancies just pointing out that there are repercussions not all of them good and serious modelling should be done to ensure the good outweighs the bad.

But I suppose if you take the view that the mother ship has to survive no matter how many of the space pods get destroyed, then sure cut away

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