• ‘No movement’ on Responsibility Council status
• Most members believe appointment has ended
• ‘Nothing more important’ for fiscal credibility
By NEIL HARTNELL
Tribune Business Editor
The Bahamas risks being “condemned” for failing to sustain a key watchdog with most Fiscal Responsibility Council (FRC) members viewing their tenure as having ended, one has revealed.
Gowon Bowe, the Bahamas Institute of Chartered Accountants (BICA) representative on the Council (FRC), told Tribune Business there has been “no movement since” he revealed to this newspaper at end-August 2023 that its work and composition were in limbo, or on hold, following enactment of the new Public Finance Management.
The Council’s fate drew the International Monetary Fund’s (IMF) passing attention in last week’s statement on the Article IV consultation with The Bahamas, where it urged that “an independent process should be put in place to select members”.
The Fund’s conclusion comes after the new Act changed the process for selecting and appointing Council members, switching this from recommendation by the House of Assembly speaker to being appointed by the minister of finance (currently Prime Minister Philip Davis KC), who is responsible for the very ministry they are supposed to be scrutinising.
Asserting that it “behooves the Government to take note” of the IMF’s passing concern, Mr Bowe said that with the possible exception of himself all members of the original Council no longer consider themselves appointed given the absence of “formal notification” as to their standing by the Davis administration.
The five-member Council, which plays a critical role since it is charged with examining whether the Government’s annual Budget, Fiscal Strategy Report and other measures align with set fiscal responsibility targets and principles, is therefore effectively non-functional. To-date it has released just two assessments - on the 2020 Fiscal Strategy Report and the 2021-2022 Budget.
Mr Bowe said this, in essence, has robbed The Bahamas of an “independent assessor” that can scrutinise the Government’s fiscal policies and projections and pronounce on their credibility to the credit rating agencies, domestic and international investors, and creditors.
“The IMF report, although they quipped about it, made the statement that there needs to be an independent process for appointments,” he told Tribune Business. “It behooves the Government to note it has not gone unnoticed by the IMF.”
As to the Council’s current status, which is attracting increasing focus from the Opposition and others, Mr Bowe added: “There has been no movement since we last spoke. There’s been no formal communication in any direction from the Prime Minister or Ministry of Finance.
“It has obviously at least been discussed at Cabinet level because there have been passing conversations. There are various Cabinet ministers that would like to see this constituted and put to bed. Their view was that it can really benefit the country.
“There are some mature minds and thoughts around the political table which, although publicly never stated, do believe we need to demonstrate credibility to external monitors. There has been no communication on appointments or a selection process.”
Holland Grant, the Bahamas International Securities Exchange’s (BISX) chief operating officer, had previously replaced Kevin Burrows as the Chartered Financial Analyst (CFA) Society of The Bahamas representative, bringing the Council’s membership back up to the mandated five.
Besides himself and Mr Bowe, the Council’s other three members were Christel Sands-Feaste, the Higgs & Johnson attorney and partner, representing the Bahamas Chamber of Commerce and Employers Confederation (BCCEC); Khalil Parker KC, who holds the Bahamas Bar Association’s seat; and Dale McHardy from the University of The Bahamas (UoB).
However, Mr Bowe said: “With probably the exception of myself, the original Fiscal Responsibility Council members do consider themselves to be no longer members because of the passage of time. In the absence of a formal notice of appointment or re-appointment, the personal liability to credibility is considered too great for persons to make off-the-cuff comments or to be considered part of the Council that’s not given the resources or formal structure.”
Other Public Finance Management Act reforms were also seen as eroding the Council’s independence. Those changes include the Council’s $150,000 annual Budget now coming under the Ministry of Finance, as opposed to the House of Assembly, with the former now responsible for providing resources to the very body supposed to be scrutinising and overseeing its fiscal policies and actions.
Asked about the consequences if the Council remains in its present state of limbo, Mr Bowe said of the watchdog and its role: “As it relates to our fiscal reputation, and not to play on the word, there’s nothing more important. Whenever we seek to establish credibility, the best way of doing that is by having an independent assessor coming behind challenging, kicking the tyres, verifying what has been done.
“It removes from the naysayers the ability to throw mud and gives those who may not have intimate access to information greater comfort that they are not relying solely on the presentation of that information.”
He added: “To me, the Fiscal Responsibility Council is the equivalent of an external auditor of a public company’s financial statements. If you look at any advanced exchange, what is the death knell for a public company? The failure to get an audit completed in a timely manner and disclosed.
“Unfortunately, from independence we have missed the filing of our audit. That’s not in question without an independent assessor to come behind and see if these projections can be relied on. We were lauded for establishing it [the Council[, and I think we will be condemned for failing to ensure it continued with vibrancy.”
Matt Aubry, the Organisation for Responsible Governance’s (ORG) executive director, told Tribune Business that the Council’s role and creation has “not necessarily manifested in the way it was intended in the original legislation”.
He added: “The IMF noting that is consistent with the recommendations that ORG provided when we benchmarked the legislation in both instances. The introduction of the Council is really powerful and important because it ensures we have an independent perspective and builds confidence in the future and beyond, so that as government is putting together a strategy it benefits from the input of independent and expert folks who are above and beyond, not creatures of the political system.
“That gives the public greater confidence in the strategy that the Government is putting forward, and their numbers are being scrutinised properly. Having that independent perspective from a review of what has been done and what will be done is very important, particularly in ensuring true fiscal responsibility and accountability.”