By NEIL HARTNELL
Tribune Business Editor
Bahamians were yesterday urged by a governance reformer to "take off the rose-coloured glasses and get real" over a post-COVID-19 predicament that has pushed the country "over the fiscal edge".
Robert Myers, the Organisation for Responsible Governance's (ORG) principal, told Tribune Business that The Bahamas had "kicked the can down the road as far as we can" as the government prepares to further add to a national debt burden that already stood at $8.4bn at year-end 2020.
With Hurricane Dorian reconstruction costs already projected to take The Bahamas's fiscal debt towards the $9.5bn mark, and many observers fearing that 2020-2021 borrowing could fall in the $1bn-$2bn range, Mr Myers called on Bahamians to break with the "false reality" sold by past administrations.
This, he argued, had involved persistent fiscal deficits and borrowing to fund a bloated public sector and social benefits that each administration left its successor to cope with knowing that The Bahamas' rate of gross domestic product (GDP) growth and tax revenues were insufficient to ultimately repay this.
Suggesting that much-improved governance was the most critical element in ensuring The Bahamas can make it through COVID-19's coming economic storm, Mr Myers said uncertainty over the timing and strength of tourism's return means it cannot be "business as usual".
"That's the biggest change that has to happen post-Dorian and post-COVID-19," he told Tribune Business. "From a government standpoint they've got to become more efficient, they've got to become more accountable and they've got to become more productive, as well as getting to a balanced Budget.
"Nobody expects that to happen overnight, and now is not a great time to be talking about that, but I don't believe we're on the fiscal edge. We're over the fiscal edge, and the correction is not recommended; it's absolutely paramount. The correction in the way the government has been doing business is not up for debate any more. We've kicked the can as far down the road as it can go."
Acknowledging the financial emergency that the government and Bahamian economy find themselves in as a result of the double blow inflicted by Hurricane Dorian and COVID-19, Mr Myers added that trying to borrow a way out of this predicament will simply result in the country's debt level and associated interest costs becoming unsustainable.
"We can keep borrowing from predatory lenders just as a drug addict keeps smoking cocaine," he said, "but the cost of doing that is irreversible, just like the drug addict that overdosed. What happens if we have another crisis." Should another hurricane, COVID-19 virus strain or global recession strike, the ORG chief warned that The Bahamas will "have less and less headroom when the inevitable comes along".
He added: "The longer we procrastinate, the more likely it is we will encounter failure. It's just a question of facing the reality. I just think we need to take off the rose-coloured glasses and get real. This is not sustainable. One thing is going to happen. It's either the end of the status quo or the end of our fiscal stability. One of those things is going to happen. Either way, one of those two things is going to play out over the next 24 months."
Mr Myers argued that The Bahamas still needed to focus on generating sufficient private sector growth to absorb workers from a slimmed down public sector. "I'm not saying we should have a 20 percent cut back in the public sector workforce, or 30 percent cut in public sector pay," he added.
"We must make it a priority to shift five percent of that workforce into the private sector annually. There's too many people in the public sector, and that recurrent expenditure is killing is and we're not getting the service from it. The larger the labour component, the less money we have to provide public services."
Mr Myers, in feedback provided on the Facebook Page of the Government-appointed Economic Recovery Committee, wrote: "Ultimately it is the Government and the way the people of The Bahamas are governed that requires the greatest innovation and change.
"This change will only happen when Bahamians realise that successive governments sold Bahamians a false reality as they continually spent money on large government and social benefits they had to know they could never pay back based on the rate at which they were growing the nation's economy and government revenues.
"This is the sobering reality this government and the Bahamian people face today," Mr Myers continued. "The only difference being that now the borrowing is completely unsustainable and has driven us over the edge of fiscal stability. The correction the Bahamas needs is not more of the same but less of the same; it needs more innovative change thinking and courageous leadership mixed with a lot of hard work on the part of the people.
"The new order of the day has to be to get an education, get smart, get retrained, become employed, be productive and go to work on time every time. Bahamians must control their destiny with government and not allow it to be controlled by government."
The ORG chief added that it was critical that the Committee focus on the economy's "immediate" need for foreign exchange inflows to replace those from tourism earnings given the potential danger to The Bahamas' fixed exchange rate regime.
He also urged it not to reinvent the wheel, and use existing works as a foundation, such as the National Development Plan, Oxford Economics reports produced for ORG and the Chamber of Commerce, and the "ease of doing business" committee's recommendations.
"These committees must focus on ways to immediately stimulate revenue inflows (FDI), job creation and money churn in the local economy while reducing government expenses. It is this action that will reduce the need for borrowing and provide The Bahamas with any glimmer of hope and a sustainable, safe future for our kids," Mr Myers said.
"The reports must be transparent to the public so that the public can at least understand what is being proposed and then acted upon, otherwise the public have no means to gauge the effectiveness of the administration and the government overall.
"Case in point, the ease of doing business committee, established two years ago that produced a report that went to government yet little to nothing has improved with the ease of doing business. In fact, we dropped in global rankings."