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Last Updated: Nov 26, 2019 - 10:31:57 AM |
- Our nation is at crossroads
- FNM legacy is increased taxation and hardship
- FNM and PLP administrations mismanaged economy
- Higher national debt and fiscal deficits despite high VAT revenues
- DNA outlines recommendations to address financial woes
The Bahamas under the Free National Movement (FNM) is at crossroads in an economy that has been steered into a crisis of epic proportions. Just after the government finally admitted that they have presided over an energy crisis with their oversight of Bahama Power and Light (BPL), the economic outlook is dimmer than it has ever been in recent memory. The fiscal deficit for 2019/20 is now projected to be $678 million (5.3% of GDP) with expected additional borrowing of $507 million, unemployment is projected to increase to over 13%, GDP growth for 2019/20 has been cut to 0.9% with negative GDP growth projected for 2020/21 and the national debt is expected to rise to $9.5 billion.
We find it absolutely amazing and unbelievable that the Minister of Finance is not of the view that The Bahamas' financial outlook is grim. Our only conclusion is that he must be living in an alternative universe totally separated from the reality of the dire situation in which we find ourselves. The genesis of the current predicament can only be traced back to the mismanagement of the Bahamian economy by FNM and the Progressive Liberal Party (PLP) administrations over the years with a combined 7 credit rating downgrades to junk bond status (S&P) since 2007.
The Democratic National Alliance (DNA) has reviewed the recently issued Fiscal Strategy Report (FSR) which was heavy on telling us that we are in financial trouble but deficient in articulating a coherent strategy for navigating us out of this crisis. Once again, the ignored numerous advice to the government by the DNA comes back to the fore. The FNM’s obsession with taxation and fiscal targets without a corresponding economic growth plan and comprehensive disaster risk management plan has proven to be a colossal failure.
In multiple communications, we warned the Minister of Finance that one major hurricane could throw the aggressive fiscal targets off without an accompanying comprehensive disaster risk management plan. Our caution was based on the obvious impact of climate change on The Bahamas with storms becoming stronger and more intense. It seems the government is now, unfortunately post Dorian waking up to this reality when it is too late and they have dug us into this deep financial hole.
The current administration like its PLP predecessor, failed to implement the recommendations emanating from the Economic Impact Assessments for Hurricanes Joaquin, Matthew and Irma while failing to ensure that NEMA complied with its legislative mandates. Today, the proverbial chickens have come home to roost. Still, one only needs to review the risk mitigating strategies documented in the Fiscal Strategy Report 2019 to realize that the current administration still hasn’t learned from its missteps. The strategies are superficial and grossly inadequate while displaying the lack of political will to address the risks identified. While it is conceded that the Government could not have prevented the landfall of Hurricane Dorian, the impact could have been mitigated with proper planning and strategy.
The significant setback to the fiscal consolidation plan has led the government to accept that we will not return to compliance with set fiscal targets until 2024/25. This is on the premise and hope that there will not be another major hurricane, Abaco and Grand Bahama will be restored as anticipated, oil prices will hold steady, a global recession will not materialize and geopolitical shocks will not further derail these targets and our fragile economy.
We have no margin for errors or fumbling by the Government of The Bahamas. Imprudent, reckless and adhoc policy decisions will only worsen The Bahamas' chances of returning to investment grade.
The DNA has serious concerns that the same FNM administration that worsened our financial position is expected to steer us through unchartered territory during what many believe is the worst economic times in The Bahamas. This is why we have written a letter to the Prime Minister providing the government with recommendations to help guide them through this dilemma.
Our prayer is that God will see us through in spite of those we entrusted with power in our Bahamaland.
Arinthia S. Komolafe
Leader
Democratic National Alliance
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