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Last Updated: Feb 13, 2017 - 1:45:37 AM |
 Since coming to office in 2012 the PLP’s trend of reckless spending, over taxation and its dependence on anchor projects to stir economic activity has jeopardized the country’s fiscal position in both the long and short term. The recent downgrade of the country’s credit rating by Standard and Poor’s is further proof of this Christie administration’s mismanagement of the country’s finances and is cause for grave concern.
On Tuesday, the Wall Street Ratings agency downgraded The Bahamas’ credit rating to BBB/A-3, just one tier away from legitimate junk bond status. A further downgrade could mean the depreciation of government bonds to non-investment grade, making it more expensive for the government to raise money in international markets. The negative revision of the country’s credit rating has even greater long term implications for the country’s future investment prospects. Already, early estimates have suggested that Moody’s will also follow suit and issue a downgrade of its own. It is no secret that these ratings are often a key determinant for international investors when deciding where to put their money. For decades now, successive governments have hinged the country’s economic success to foreign direct investments; however the government has failed to exercise fiscal prudence and has thereby threatened the country’s entire economic model.
Without question, this administration’s economic policies have failed. By even government accounts however the downgrade was not unexpected; It was just weeks ago that officials at the S&P cautioned the government over its fiscal position pointing specifically to the economic shock of Baha Mar’s bankruptcy filing and the unlikelihood of the government and the developer to resolve the ongoing legal wrangling. Rather than accept responsibility for its failure however this government has attempted to justify the bleak assessment and in a statement issued overnight, even dared to suggest that the country’s “real economy” has seen improvement. In fact, the statement touts the introduction of VAT – which has succeeded only in pushing more Bahamian families below the poverty line – as a major component of successful fiscal reforms and also to the recent drop in unemployment which was spurred by an uptick in the temporary employment generated from the Bahamas Junkanoo Carnival.
Clearly the Minister of Finance and his junior minister are completely out of touch with the realities facing the average Bahamian. The Christie administration’s response to the downgrade is scathing indictment of the political directorate who rather than address the myriad of problems facing our economy have chosen to participate in petty tit for tat arguments.
Despite the Prime Minister’s assurance that the government’s long term fiscal strategy will in fact yield economic improvement, The Democratic National Alliance has no confidence that this PLP government will be able to save this sinking ship. In addition to the blatant mismanagement of the nation’s finances, the government’s very public missteps in dealing with the fallout from Baha Mar has done little to inspire confidence and has certainly damaged the country’s reputation in the eyes of the international community.
What the country needs now is a new fiscal footpath; one paved with transparent and effective policies which will create employment and entrepreneurial opportunities for Bahamians at all socio economic levels. The Democratic National Alliance has already begun the work of attempting to salvage the country’s international reputation. In meetings with local stakeholders from both the private and public sectors we have begun the consultative process on the way forward.
The first and perhaps most important step toward fiscal solvency is the introduction of a Balanced Budget Act as part of efforts to address government overspending and encourage greater fiscal accountability with the funds from the public purse. Combined with other measures including the reduction of the Prime Rate to give Bahamian entrepreneurs more access to capital and the effective collection of outstanding government taxes, the DNA upon taking office is committed to making the necessary overhauls designed to immediately improve economic conditions.
A DNA government will work to reduce the tax burden on struggling Bahamian families, breathing life back into the middle class while creating the kind of environment which will encourage the entrepreneurial spirit and empower Bahamians to become owners of their own economy. Through Green investments which balance the use of our natural resources a DNA government will work to ensure that new industries are created as part of a wider plan to diversify the economy and reduce our dependence on Foreign Direct Investments. As part of the country’s new fiscal direction, the DNA is also committed to the establishment of an Orange Economy which will focus on the expansion of creative and cultural industries as well.
Business as usual will no longer work. The country’s fiscal position is a ship clearly run aground but there is a better way. In order to rescue the country’s economy from despair, we must act now! Our country’s financial future depends on it.
Branville McCartney
DNA Leader
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