THE comments of James Smith about our economy shouldn’t come as a surprise.
It doesn’t take a former Finance Minister and ex-Central Bank governor – two titles Mr Smith has had in his career – to recognise the amount of spending to cope with the aftermath of Hurricane Dorian and the ongoing costs of the pandemic.
But as Mr Smith says, “From a policy perspective we’re going to be facing enormous challenges for a couple of years out unless something extraordinary from the outside comes in to change our outlook. Bahamians can only cross their fingers and hope that, like in the past, a small miracle happens. It’s not reflected in the policy positions from my point of view.”
A miracle isn’t something you can count on – so if the reality of the situation isn’t reflected in the policies, then some of those promises simply aren’t going to happen.
One of the areas Mr Smith points out is the number of people working in the civil service. The FNM says no civil servants were laid off during COVID’s peak, while the PLP are said to have “no appetite” for spending cuts. So if neither side is cutting spending, where are the savings coming from as we continue to bring in less money as a result of the pandemic?
And, of course, on the election trail, candidates will be reluctant to tell public workers that their job might be gone in cutbacks after the pandemic – but that might be the truth.
Take a look at the nation’s Budget and already the amount we are spending on servicing debt is the highest item in there.
You know yourself if you have a loan that you have to pay it back. The same with the nation. And if your income drops while the debt rises? Well, that can only go on so long.
So are we being promised cake tomorrow when we barely have enough for bread?
Mr Smith said: “Sometimes you have to be open and transparent, and treat people as intelligent and articulate. It’s a challenge that many of us are prepared to meet, and there is no point in sugar coating it because it will reveal itself in short order.”
He added: “How much of the debt is from international agencies, how much is from private investors? What is the tenor of the debt – is it five, ten, 15 years? To lower your debt service charges, you might have to reschedule it or stretch it out so that the monthly payments are less or interest-only.
“You need to give yourself some breathing room until tourism rebounds. You’re looking at flow, not the stock. Debt servicing is already the highest line item in the Budget, and it’s going to be by far the highest item in the Budget.”
As we go into this election, the nation stands at a precarious point. Whoever wins will have to address our finances. That might very well mean changes in taxation to bring more money in to reduce the deficit. So if a candidate tells you there won’t be any changes in taxes, they had better be forthcoming about where the money to pay our debts will be conjured up from.
Famously, political advisor James Carville quipped in the 1992 US election, “It’s the economy, stupid” in terms of what was important in the election. It’s the same here – alongside dealing with the pandemic because that’s holding back the economy too.
This isn’t a game, and we need to have very clear answers about how our would-be leaders plan to deal with the very serious problems that lie ahead.
Don’t let them wriggle off the hook.
Comments
JokeyJack 2 years, 7 months ago
Yes, taxes will go UP significantly if either the FNM or PLP win the election. Bahamians love paying high taxes though, they done use, so they will vote for them. I know a guy in Nassau living in his car who is planning to vote for the FNM. I don't know why these parties even spend money on signs and stuff, they already got the people trained. Take that money and use it for lavish international trips.
OMG 2 years, 7 months ago
So amusing to see dedicated followers wasting time, money on useless parades, free tee shirts, cookouts, backhanders, when in reality whomsoever wins cannot, I repeat cannot do 90% of their pre election promises because thete is no money. As for free breakfast, snacks and lunch for all students, totally impossible financially or practically. When will these stupid people adorning their cars in posters and sitting for hours honking their horns realise that nothing will change apart from a few more loyalty civil service jobs.Wake up.
Sickened 2 years, 7 months ago
Perfectly stated!
JokeyJack 2 years, 7 months ago
You are totally incorrect. Lincoln knows where the money is. YOU can't do it now because the money is not available to the Treasury. Under the COI, the people will know WHERE their money is and be able to benefit from it.
bahamianson 2 years, 7 months ago
You can't eat your cake and have it too. We cant keep dishing out money and not expect to pay it back. All should contribute to our economy, all. We all use the roads, and not all use the hospital, public schools, free water spickets around the island, free uniform plan, and now free breakfast, lunch and snacks. Who is going to pay for this? We all were born equally, it is what you do with your time that determines your lifestyle. Just ask my friend whom went.to GHS and is now a PHD.
whogothere 2 years, 7 months ago
Why doesn't the Bahamian government try frugality for once...maybe don't spend 30 million on a bridge with a constituency of only what 3-5k? Maybe skip that 70 million dollar airport ...invest in education and health care maybe?
Honestman 2 years, 7 months ago
Higher taxes is the price all of us have to pay for successive administrations keeping thousands of civil service personnel in totally unproductive jobs. Neither the FNM nor the PLP have been prepared to tackle this critical issue and they certainly won't in an election year.
Sickened 2 years, 7 months ago
Yup! That's a big can that we keep kicking down the road. It is our single biggest problem that we refuse to address. I believe it stems from our education system though. After all, who else will hire the vast majority of our very poorly educated and illiterate civil service? There is simply nowhere else to place these people. We don't have mines or factory lines to put them in.
KapunkleUp 2 years, 7 months ago
We are heading down the same path as Greece.
Proguing 2 years, 7 months ago
yes except that the EU bailed out Greece, who will bail us out? China?
crawfish 2 years, 7 months ago
up to now, we have been like a bouncing ball; First bounce, FNM; Second Bounce, PLP; Third bounce FNM and so on. In the meantime nothing positive happens. On the negative side, the National Debt increases. The bank accounts of the connected get bigger, we borrow more money, and the people suffer.
Bahamas, have we not had enough of this failed way of doing things.
I see where Papa cannot vote today because his name is NOT ON THE REGISTER. Someone does not like you Papa.
birdiestrachan 2 years, 7 months ago
TRUTH BE TOLD AND GOD BE THANKED. It is plain to see and understand that there will be difficult times ahead..With the help of God and men blessed with vision, we will overcome
The facts are doc and his crew have no vision, none at all. The heritage site plan is the visionary idea of the Christie administration Now they the FNM has decided to run with it Why now?
ibonamy 2 years, 7 months ago
Bahamians have been living high of the land for a very long time. We continue to hang our baskets beyond our reach. The drugs years exacerbated this even more. Successive governments did not see fiscal prudence as a popular policy and continued to borrow and spend. So the chickens have come back to roost. How do we get out of this situation? We cannot tax or borrow our way out of it. The average person don't understand our Debt to GDP ratio and is concern about how to get the next Nike shoe or Remy hair piece.(No pun intended) We are not teaching our children the value of money or fiscal responsibility. Do we know how many millions of dollars that leaves this country every year on automobiles from Japan. We are a nation or Car growers, I am convinced the average household have at least 3.5 cars and 2 are not working. The inner city is plague with derelict vehicles and that is so sad. The space can be used just to grow something to eat. The next government will have to be extremely discipline and tough decisions will have to be made. Honesty and transparency must be the norm in order to govern effectively. We as citizens must do our part even more for the sake of our country. Corrupt dealings must be wiped out completely. There are to many issues and the work starts on September 17 2021. Please be safe as you cast your vote.
ibonamy 2 years, 7 months ago
Bahamians have been living high of the land for a very long time. We continue to hang our baskets beyond our reach. The drugs years exacerbated this even more. Successive governments did not see fiscal prudence as a popular policy and continued to borrow and spend. So the chickens have come back to roost. How do we get out of this situation? We cannot tax or borrow our way out of it. The average person don't understand our Debt to GDP ratio and is concern about how to get the next Nike shoe or Remy hair piece.(No pun intended) We are not teaching our children the value of money or fiscal responsibility. Do we know how many millions of dollars that leaves this country every year on automobiles from Japan. We are a nation or Car growers, I am convinced the average household have at least 3.5 cars and 2 are not working. The inner city is plague with derelict vehicles and that is so sad. The space can be used just to grow something to eat. The next government will have to be extremely discipline and tough decisions will have to be made. Honesty and transparency must be the norm in order to govern effectively. We as citizens must do our part even more for the sake of our country. Corrupt dealings must be wiped out completely. There are to many issues and the work starts on September 17 2021. Please be safe as you cast your vote.
hrysippus 2 years, 7 months ago
The only real question is whether the next elected administration introduces Income Tax, Death Duties; also called Estate Tax because it sounds nicer, or both of the above. i ncome Tax is more complex and will require many many more State Employed Workers but will give the government huge power of knowledge of what the citizens are earning. estate Tax is easier to administer and will more effectively redistribute wealth. The political elite may not want anyone to know about their unusually earned income though.
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