The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Businesses yesterday said government cost-cutting must be a key element in any strategy to put The Bahamas’ public finances in order post-COVID.

Dwayne Higgs, WHIM Automotive’s general manager, told Tribune Business that a slimmer civil service is vital to reducing public expenditure after the COVID-19 pandemic further “exacerbated” the country’s structural fiscal deficits and soaring national debt.

Responding to Standard & Poor’s (S&P) decision to again downgrade The Bahamas, thus pushing it further into so-called ‘junk’ status, Mr Higgs said: “Debt is now over $10bn. So it’s a matter of getting that under control, and the only way that’s going to happen is if you have consistent revenue.”

This, he added, meant allowing businesses to operate more freely without COVID-related curfews and other restrictions while waiting for tourism to come back. “You have the Straw Market opening soon, so that’s going to be another good thing,” Mr Higgs said.

“We need to put downtown back to where it used to be so the cruise ship passengers actually have somewhere to go when they come off the boat. This is going to be a long time to recover. We have to stop borrowing, because we can’t just keep borrowing and borrowing thinking that that’s going to get you out of debt.

“We need to have reduced spending and, if that means cutting government jobs, then that’s what it has to be because you can’t keep borrowing and hiring people and inflating government’s payroll. You keep going down the same road worse. Then what if we’re not allowed to borrow any more because our financial position is so bleak. Then what?”

Mr Higgs added that S&P’s downgrade was “pretty much expected” given that COVID-19 had “pretty much killed our economy” for much of 2020 and into the early months of 2021.

S&P, in justifying its downgrade action, pointed to the $2.4bn national debt increase in just two years, which reflects the scale of the blow-out produced by Hurricane Dorian and COVID-19. The credit rating agency added that, in 2020, government revenues were lowered by 10 percent while social and healthcare spending increased by 11 percent.

Vasco Bastian, owner/operator of the Esso gas station at East Street and Soldier Road, added: “We need more domestic investments. We need to promote more domestic investments. All of that red tape that blocks Bahamians from investing in their country has to be removed.

“This economy is a service-based economy, and it has always been based on foreign direct investments. We need to send our minister for foreign affairs and our minister for financial services abroad to bring back some foreign investors.

“In addition, we also need our Bahamian people to step up to the plate and help the country. Because if you’re a Bahamian and you have $2m sitting in the bank, and you aren’t doing anything with it, then you need to convert that money into business opportunities for your fellow Bahamians.”

Arguing that it will take more to grow the Bahamian economy than just asking investors to pump money into a flagging system, Mr Bastian said: “We need to get the people responsible for finances around the table, and we need to get the best and brightest minds around with them and see how we can get this ship back on a steady path.

“In order for the debt to disappear our spending has to be reduced, or we need to plug our outstanding receivables. We just can’t tax ourselves out of debt We need to figure out a way to reduce our expenses, and we need to find out in a legitimate way. We just can’t tax the top one percent of the population in order to pay for the national debt.”