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Last Updated: Feb 13, 2017 - 1:45:37 AM |
 The reports of a receding GDP as reported by the Department of Statistics should have been the least of our worries, or so we thought. The recent estimates provided by the Department gave us something to really ponder, because it seemed inconsistent to a large degree from historical data and previous projections. But, be that as it may, the Department reported that the GDP grew in current prices by 2.47% but decreased in constant prices by 1.66%.
Now, the main difference between “constant” prices and “current” prices is that current prices takes into effect inflation and the rise in the price of goods and services. The main part about this is that the apparent rise in GDP the Department of Statistics is reporting is almost certainly as a result in the rise in prices brought on by additional taxation without the requisite increase in demand for goods and services.
Needless to say, a valuation in GDP under the estimates the Department published just recently that indicates an “increase” in GDP via current prices is an aberration. In fact, it’s essentially bad news if wages are stagnant and unemployment is weak, both of which are the principle drivers of demand. To us in the DNA, it really isn’t an increase in GDP at all, but an increase in the estimated value of the GDP without any substantial growth that justifies this- as we have seen the Department come clean with regard to the proposed decrease in GDP under constant prices.
These issues are critical at the margins for the Bahamian economy, because just now recently the Central Bank is estimating that the government is $100 million off its deficit targets. This was something that the Minister of State for Finance said was likely to happen before the end of the fiscal year, 2015-2016 and in fact he had estimated that the government would be over $250 million dollars off of its deficit targets. We appreciate the Central Bank for being frank on this matter, while the DNA will remain guarded to the state of this issue moving forward.
While the government touts its successes in Value Added Tax collections, to the tune of $423 million, the sad fact of the matter is that they have not given the Bahamian public satisfactory answers in terms of how VAT receipts offset Customs Duties receipts along with other revenue generating areas and agencies to show that the deficit and overall debt would be substantially decreased over time.
What’s worse is that it must be stressed that pro-growth initiatives that would grow the Bahamian economy are sorely missing, and the lack of it lends to the under performance of our economy and precipitous bad news on every economic front. It’s a dangerous mix, especially when inflation has been increasing, on a minimum, of .03% for the last 10 plus years, which makes the cumulative effect staggering.
The DNA notes that notwithstanding the terrible news on the valuation of the GDP provided by the Department of Statistics; the lack of clarity and coherence on the reduction of the deficit and debt; and now understanding through virtue of both of these issues that demand is affected by the lack of employment and lack of growth in real wages in The Bahamas while suffering under consistent inflationary pressures, we have to say that the attempt to revive the Bahamian economy through high taxes and intangible spending under this government has failed.
The DNA has gone on record with ideas and solutions to grow the economy; being willing to negotiate on equitable and fair taxation; being transparent and honest with your tax money and how it is spent; and now making a commitment to fighting inflation and the consistent rise in prices in The Bahamas. Financial transparency has proven to work with regard to keeping government Treasuries in check, and we feel the Bahamas can benefit well from a change in thinking on the privacy position successive governments have apparently enjoyed over the previous years.
Youri Kemp
DNA Candidate for Garden Hills
DNA Spokesperson for the Economy and Finance
© Copyright 2016 by thebahamasweekly.com
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