While the Perry Christie government has said it appreciates that the Caribbean region is being negatively impacted by lower commodity prices, and external investment uncertainty through the loss of correspondent banks services the main opposition Free National Movement (FNM) insists that its policies have failed.
The government has said that while the country has “not been completely exempt from any of these phenomena” it is “confident that this review will reveal that medium term economic prospects for the Bahamas are good given projected foreign direct investment, the government’s fiscal consolidation efforts and the implementation of innovative policy initiatives with respect to certain structural constraints the country has traditionally faced in the energy sector and labour market”.
But FNM leader Dr. Hubert Minnis asked “what does it take for this government to act in the best interest of the Bahamian people and to start telling them the truth about our precarious financial situation?
“With Moody’s Investors Services placing The Bahamas on review for potential further downgrade to Junk status the time to act is now,” he said, noting that the time for the government’s “empty rhetoric and broken promises is over.
“A further downgrade would hurt our country tremendously, adversely impacting our ability to fund capital projects in the future,” Minnis said, noting that this is not the first time that the international rating agencies have warned the government “that its reckless spending would push the country’s financial situation over the preverbal fiscal cliff”.
Last weekend, Moody’s Investors Service said its decision was prompted by the continuing rise in risks to the Bahamas’ medium-term economic prospects and its fiscal strength, “notwithstanding the government’s ongoing fiscal consolidation programme.
“The review will allow Moody’s to assess the likelihood that economic growth prospects will improve, debt metrics will stabilize and government policy will effectively address its macroeconomic and fiscal challenges,” said Moody’s, adding that the review action indicates that the rating is likely to move down, and that the change could be by one notch or more.
Moody’s said it expects to complete the review within two months and that during the process it will assess the volatility in gross domestic product (GDP) estimates reported in recent years.
The ratings agency will also examine the government’s plans to put forward growth-supporting reforms, including the upcoming National Development Plan and a mortgage relief plan, to boost economic performance past 2017.
The government said that its position is that ongoing construction at various projects around the country is generating significant economic activity.
“While the archipelagic nature of the Bahamas at times creates a lag in economic activity in the Family Islands being reflected in official statistics, there is no question that the level of real economic activity in much of the major islands of the Bahamas is much higher than it was three years ago.”
It said that growth prospects for the Bahamian economy are also very good with the imminent restart of construction at Baha Mar and its subsequent opening.
“ In addition, challenges within the energy sector are being addressed by the new private sector management team at Bahamas Power and Light and the benefits of this will be realized in the short term,” the government said in a statement, adding that it has also “strategically” entered public private partnerships (PPPs) “to deliver growth enhancing infrastructure in New Providence and the Family Islands to support economic growth”.
It said on the fiscal side the government is addressing rising government debt through its fiscal consolidation plan.
“The successful introduction of VAT demonstrates the government’s commitment to its plan. Central to the plan is the modernization and enhancement of revenue administration. This is supported by the creation of a Central Revenue Administration which will lead to increases in the collection of real property tax and business license fees in particular.“
“The rate of growth of government debt has declined steadily over the past three years and with recent revenue enhancement measures and expenditure control efforts, it is expected that the increase in debt will halt and the level of government debt will begin to decline in absolute terms by 2018/2019.”
But Minnis said that the Christie government has failed to take heed of the warnings by the international rating agencies and “even with tax increases and higher fees they keep spending and putting The Bahamas financial standing at risk.”
He said the Bahamian people “deserve a government that will lead it to a more prosperous future, rather than a government that continues to run it into the ground”.
- U.S. denies protective status to Bahamas hurricane evacuees
- JAMAICA | JA Soldiers (DART) in the Bahamas Assisting with Recovery Efforts
- Hurricane Dorian targets the Bahamas -Evacuation Ordered from Cays
- UNITED STATES | 'Groped' by the butler, couple sues Sandals for US$30-million
- DOMINICA: Single-Use Plastic Ban to Go Into Effect January 2019