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‘We can’t become a nation for sale’

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Mario Carey

• Top realtor fears forced public asset disposal

• Ex-minister backs ‘maximising’ balance sheet

• Gov’t must ‘step out of box’ to combat crisis

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A prominent realtor yesterday voiced fears The Bahamas will become “a nation for sale” unless it quickly gets its $10.4bn national debt and associated economic and fiscal crises under control.

Mario Carey, who has also stepped outside the real estate business via his Mario Carey Ventures (MCV) initiative, told Tribune Business that this nation might be forced to sell-off key national assets and patrimony unless it rapidly reckons with a growing debt mountain that is presently bigger than the Bahamian economy.

Speaking after this newspaper revealed that the country’s debt-to-GDP ratio stood at 100.4 percent at end-June 2021, he acknowledged that The Bahamas was now in “uncharted territory” when it came to sovereign liabilities that now exceed its total economic output.

“It is concerning. It has to be concerning, it has to be,” Mr Carey said of the data confirmed by the Central Bank of The Bahamas 2021 second quarter economic review. “I just hope it doesn’t get to the point where we become a nation for sale with a fire-sale of national assets.

“We’re sort of entering new territory. We had a debt before that was manageable, and if we keep going like this what will be the ripple effects?” He added that if The Bahamas did not change course, and maintained persistent annual fiscal deficits, the outcome could ultimately be a devaluation of the Bahamian dollar “and we don’t want that”.

While the term “nation for sale” first appeared in reference to The Bahamas during the drug boom decades of the 1970s and 1980s, in this context Mr Carey is expressing concern that the Government may be forced to sell-off assets owned by the Bahamian people and taxpayers to pay down the national debt if fiscal deficits maintain their current trajectory and all other policy options fail.

Among the assets/national patrimony that could be offered for sale would be Crown Land, Treasury Land and other real estate assets, including buildings owned by the Government. State-owned enterprises (SOEs), such as Bahamas Power & Light (BPL), Bahamasair and Water & Sewerage Corporation, might also be placed on the auction block although the price they would fetch is unlikely to be high.

While some may deem such a scenario unlikely, there is little doubt that The Bahamas is presently headed in this direction unless the Prime Minister and his administration change course. Asset sell-offs are a feature of International Monetary Fund (IMF) adjustment programmes, and Alfred Sears, minister of works and utilities, admitted on the campaign trail this is where The Bahamas is headed without drastic action.

Under the IMF’s oversight, such assets are often sold at fire sale prices via privatisations that are not always in a country’s best interests. The Bahamas would likely earn higher prices via selective asset disposals done at its own pace, and under the Government’s control.

And Mr Carey is not the only person suggesting that The Bahamas move down this route. James Smith, ex-minister of state for finance and former Central Bank governor, yesterday suggested that the Government often focused solely on the income side of its financial ledger and too often ignored its balance sheet.

But, rather than simply sell-off Crown or Treasury land, he suggested that the Government partner with investors in developing select areas. Mr Smith explained that the land would represent the Government’s equity stake in such projects, and through such public-private partnerships (PPPs) it could generate revenues to both pay down the national debt and contribute to a sovereign wealth fund to benefit future Bahamian generations.

No valuations for the extent of the Government’s Crown and Treasury land holdings have been made public, but Mr Smith said: “Because the Government has a [accounting] system that deals on a cash-only basis, the Government sometimes - or most times - ignores the assets it owns.

“When any household goes through tough times, and it needs additional income, you either get a loan from someone willing to give it to you, a gift from someone willing to give it to you, or you make a choice about the assets you hold that you need to liquidate to meet the expenditure gap. They should really look at doing this sort of thing.”

Noting that the Government “owns a hell of a lot of real estate throughout the Family Islands that is ripe for development”, Mr Smith said it should target select areas that could be developed in partnership with Bahamian and/or foreign developers.

“Suppose a developer wants to do condos in a Family Island where the Government has a lot of land. The Government puts the land into the development, and gets a revenue stream to help pay down the debt and benefit future generations of Bahamians,” he told Tribune Business.

“You’re basically saying, look, we’ve already pretty much exhausted the traditional way of dealing with this such as borrowing and raising taxes, and are really in a hole with a 100 percent debt-to-GDP, which is a crisis area. The traditional form of dealing with government debt, borrow, borrow, borrow, you are coming to the end of that road. 

“I’m saying: ‘Step out of the box for a while, and look at how to effectively maximise a return on your fixed assets’. Look at all the areas within the Government where they’re providing services that can be done in a more efficient way by the private sector.”

Asked which services he was suggesting could be outsourced to the private sector, Mr Smith replied that matters of health, education, national security and foreign affairs need to be dealt with by governments. Much of the rest, he added, could be performed by the private sector.

“The point I’m making here is that you’re coming to the end of the road with traditional strategies of borrowing to cover the debt. We need to step away, like in a household where a job has been lost, and say we have to move to a much cheaper place or sell a new car,” he said.

“The Government is approaching that given the increase in the debt, where it will be very difficult to finance it without the necessary economic growth. We’re digging ourselves out of a very deep hole, and the pandemic is responsible for most of it.”

Comments

TalRussell 10 months, 3 weeks ago

C'mon, what's the problem with holding up your knickers? — Seriously, I can't recall a single occasion, when Dougie's boy, Comrade Mario, was so up to his knickers,— fretting over the national debt when Minnis was rackin' up — the full 100% the colony's $11+ Billions, — Yes?

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DonAnthony 10 months, 3 weeks ago

I for one will welcome our IMF overlords. We have never had a balanced budget since independence, we are abysmally incapable of managing our fiscal affairs. The inevitable privatization of loss making SOE’s will be liberating and save future generations billions, the sooner it happens the better. Also it is important to remove government patronage from these sectors where jobs and contracts are used for political and financial benefit of the few. We need govt as small as possible and a fraction of the size now. Hopefully the IMF takes charge soon. We should welcome them with roses and kisses, or at the least a cold kalik and conch salad.

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TalRussell 10 months, 3 weeks ago

I agree, anyone looking for a side hustle, Well, look no further than the House of Assembly (HOA). — The HOA, is most definitely — Thee — Best Bay Street place to go looking. — Will be hard-pressed to find seated in reconvened October 2021 House Session — a single Red MP, that hasn't been handed a — side-hustle comes lots fringe benefits paycheque, — usually includes free use a fine, insured Motor Car, — All Courtesy PopoulacesPurse, — Yes

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C2B 10 months, 3 weeks ago

Mario is on to something here. What is wrong with a sale on favourable terms? Find an out Island no one lives on and sell it to a group of billionaires so they can form their own Country (Think Turks & Caicos) and evade taxes in peace.

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mirkovonkovats@gmail.com 10 months, 3 weeks ago

It’s simple - who wants to PPP with government and have them on boards? Please… straightforward asset sales against cash and pay down debt to a sustainable level. All sugarcoating. Greece, Portugal, Trinidad, Jamaica. Sell all SOE’s conditional on competitive pricing for all Bahamians. Solutions please let’s do it now before the IMF will do it brutally. Who needs Bahamasair - look at Alitalia. Sell and request a minimum domestic network at competitive prices. No way out. Who needs BPL and W&S as SOEs? Unbearable.

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One 10 months, 3 weeks ago

What did this debt buy us? Where did it go?

Bahamians deserve to know. It will take generations of Bahamians to pay this debt for no apparent benefit.

Imagine being born and being responsible for your parent's mortgage. For a house that was never built. What hope do you have to pay back a house that was never built and eventually afford to build your own house?

Selling away the country won't fix the problem because the same practices will continue until we have to sell again.

We have too much government. This is just one example: In Britain 1 MP represents on average 92,000 people. Based on the Bahamas population we should have 4 MPs for all of the Bahamas. We have on average 39 MPs, what are their salaries and is it worth it?

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Baha10 10 months, 3 weeks ago

Remove BIA from the investment equation and let whatever investment exists today flow in without impediment … many will fail, but some will succeed … let the free market decide … either way, money flows in and fuels the economy.

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DonAnthony 10 months, 3 weeks ago

Sell MICAL and pay off entire national debt. Added benefit is no more taxpayer funds spent on these sparsely populated islands. Any extra funds go into a national sovereign fund where we can only spend the interest each year. Amend the constitution to require that every year there be a balanced budget. Sell all SOE’s to remove these losses from public purse each year, and to reduce political patronage and to crush the unions.

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FrustratedBusinessman 10 months, 3 weeks ago

The problem with selling SOEs off is that someone has to be willing to purchase them in the first place. Little do Bahamians know, companies like customers who pay their bills. No one is going to run operations at a loss here.

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DonAnthony 10 months, 3 weeks ago

If we have to sell the SOE’s for a $1 each so be it. Last year we subsidized them to the tune of over 460 million, simply removing that is a huge benefit to our balance sheet. Will have suitors hand over fist for BPL as many companies already have submitted numerous proposals to provide energy generation or to buy the corporation outright. Private airlines already service many family islands already, some private concern would be happy to subsume bahamasair’s routes. ZNS is totally unnecessary. People will have to learn to pay their bills or lose services like in the real world no more slackness or fantasy land of never paying bills, workers will have to work or be fired, just like everyone in the private sector does already.

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Bobsyeruncle 10 months, 3 weeks ago

When are they going to introduce a Powerball type lottery. The part of the proceeds the government keeps won't pay of the national debt anytime soon, but it will be substantially more that they get from the numbers boys.

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Emilio26 10 months, 3 weeks ago

The number boys asqre already paying taxes.

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Bobsyeruncle 10 months, 3 weeks ago

Sure, but a government lottery will net the government far more than they get in taxes from Sebas & Co. IMO. They could even have both going at the same time.

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tribanon 10 months, 3 weeks ago

They are not paying anywhere near the taxes they should be paying on their enormous profits and never will do so. Take that thug Sebas Bastian for example. There are only a couple of very highly paid key individuals within his entire organization who have access to the real accounting records of his sprawling criminal enterprise.

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mirkovonkovats@gmail.com 10 months, 3 weeks ago

Ever heard of BIA type investment authority in the free world? Trinidad,Jamaica,Turks&Caicos, Cayman? Let the market speak. Let investors invest, let them succeed and let them fail. Ease of Business could be better than Gaza!

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ThisIsOurs 10 months, 3 weeks ago

"We had a debt before that was manageable,"...

not quite....

Im told this 100% debt to GDP is old news, they just werent reporting it. Shuffling numbers and excluding debt categories to make it look good. Funny how it never fools Moodys

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ThisIsOurs 10 months, 3 weeks ago

Too late!!! Someone been selling off cays and islands to foreign investors

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tribanon 10 months, 3 weeks ago

A prominent realtor yesterday voiced fears The Bahamas will become “a nation for sale” unless it quickly gets its $10.4bn national debt and associated economic and fiscal crises under control.........Mario Carey...... told Tribune Business that this nation might be forced to sell-off key national assets and patrimony unless it rapidly reckons with a growing debt mountain that is presently bigger than the Bahamian economy.

And just think how much money Carey has pocketed over the years from selling-off to his wealthy foreign clients acres and acres of our nation's most scarce national treasure, i.e. land. LMAO

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TalRussell 10 months, 3 weeks ago

Why has Long Island been outpaced, compared to the colony's other islands in attracting tourism and investments of any measurable scale?
Partnering someone with Comrade Mario's international reach is just what Long Island has been missing.
Long Islanders, by utilizing, Mario Carey Ventures (MCV) initiative website, will also for the very first time, be the vehicle to also stepped beyond their island's reach by sharing stories with Comrade Mario's $1 million assets foreigners, stories told by islanders, eager share their personal experiences of the different ways, Long Islanders — Call their sheep. — And. how seriously the islanders, take to bicycling about the island.
And, yes, — there is 'No Fear' in tellin' Comrade Mario's rich foreigners, that— 'Long Island, "Is" An Island For Sale.'

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SipPis 10 months, 3 weeks ago

On the contrary, we absolutely SHOULD be a nation for sale. That's the only hope I see for my children and their children here. This cheap nationalism is used by local business and politicians to safeguard their interests. We are a stone's throw away from a country awash in money but we continue to make it far too onerous for that money to make its way here and lift the tide. The BIA should be done away with altogether. Revenue would increase dramatically overnight.

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