The Tribune

IT can be easy to get lost in the big numbers when it comes to the economy, but the simple fact is this – we have more money going out than we have coming in.

The Bahamas has a debt of around $10bn, and the amount of money coming in has plummeted because of COVID-19. We know that. We see the hotels that have been shut down for long periods of time. We know people who have been waiting for the economy to open back up to get back to work. We see restaurants with limited numbers, businesses that have been tightening belts and limiting hiring. The evidence is right in front of our eyes.

Just as when you’re balancing your own budget, so too does the country have to balance its budget. Not bringing in enough money? Well, you can either raise more money, cut your costs, or borrow to cover the shortfall. You’ve always got to pay it back, though – and the more you borrow, the more of a cost it is ongoing.

So where does that leave the country? Well, as Craig A “Tony” Gomez comments in today’s Tribune, one of the prospects is that of increased taxes. Raising more money – from you and me – to pay for the shortfall. The trouble is, you can’t do that too soon either with so many out of work and not having any more to pay. If you’re charging someone 20 percent now and they can’t pay it, you’re not getting any more if you charge them 30 percent and they still can’t pay.

As for cutting costs, well, around a third of government spending is taken up by debt and subsidy costs.

That’s $938.5m – with $742m forecast spending on civil service wages, salaries and allowances. Are those being cut? Well, in the same Budget, Prime Minister Dr Hubert Minnis announced a slew of hirings of young people to add to the civil service.

Looking further, we can see that around 3/5 of the whole Budget for the coming year is accounted for by wages, debt servicing costs and subsidies to state-owned enterprises alone.

The hope is that the future sees the economy recover and bring in more money to balance up against some of those costs – but Mr Gomez, for one, thinks it won’t be long before extra taxes are brought in as well. “It has to come,” he said. “There will be increased taxes or even a personal income tax.”

We wrote in this column last week of how the Budget needs everything to go just right if it is to achieve its goals – and Mr Gomez pointed out the danger of that. “We have a history of falling short on the revenue side of the Budget,” he said.

Even if we rebound, there are areas that need addressed. The subsidies to state-owned enterprises have long been an issue. The new Budget even adds to that, with the Ministry of Finance spending allocation including $6.117m to cover payments to investors who hold bonds for the Education Loan Authority, with the public picking up the cost if the authority runs into arrears. The last published accounts show 88 percent in default.

As ever with a Budget, it is the fine detail that comes out after the speech that shows the true position – and while the government has avoided increases in VAT and so on this time around, it’s not a financial position that would fill you with too much confidence. We really do need that recovery to get into full swing – and soon.

Vaccine sense

One of the smartest and clearest voices throughout the pandemic has been that of Dr Nikkiah Forbes. Her assessments of our situation as waves of infection have affected The Bahamas have been clear, non-partisan and consistent.

We write above about the economic peril facing the country, while at the same time we face a peril to our health. There is one solution that can help both: get vaccinated. “We are seeing that there is vaccine hesitancy and there are also a lot of myths about the COVID vaccines that need to be combated to increase the number of persons that are vaccinated,” Dr Forbes said, adding: “I really implore everyone to protect themselves from COVID-19. The public health measures work. And I encourage people to know the facts on COVID-19 vaccines and COVID-19 in general. Go to reputable sources for information.

“The benefits of vaccines outweigh risks and are major solutions for seeing our way out of the COVID pandemic and for the situation to be better in the country.”

Turning the country around won’t be simple. But it can start with something as simple as getting your jab. Book it now, get it done.