|
|
|
|
Last Updated: Feb 13, 2017 - 1:45:37 AM |
Kemp: What a DNA Government would do in light of a Moody’s Downgrade!
By Youri Kemp, DNA Spokesperson for the Economy and Finance
Jul 19, 2016 - 11:32:32 AM
|
Email this article
Mobile friendly page
|
 The possible Moody’s downgrade of our sovereign credit rating to junk-bond status is real. It’s more than a wake-up call or warning shot, but it is the beginning of the rot and decay of the country we call The Bahamas if we continue on the same trend. In fact, some parts of this country and economy are damaged permanently.
The International Monetary Fund (IMF), on the other hand, made their regular Article IV Assessment on The Bahamas just recently and echoed the sentiments of the DNA, repeatedly, on the lack of soundness of this administration’s presentation of the country’s financial prudence and economic policies.
Apparently, the IMF doesn’t believe the rosy pictures painted by this PLP administration anymore and have said so clearly in their latest assessment of The Bahamas, and we hasten to add that the DNA has not believed a word of what this PLP administration had to say on their fiscal management or economic wizardry from about a year prior to Value Added Tax implementation.
All of this hurts Bahamians now and in the long term. Because not only do Bahamians not see all of what this PLP administration is doing to them that’s causing all of this angst and negative reports from all and sundry, but the people they voted in and trusted with their lives are not acting in good faith with them and their money. It’s sad to see it play out like this, but play out like this it must.
This administration, in addition to the Official Opposition and their entrenched core elites, could not begin to tell you how this level of political logjam, mistrust and overall childish behaviour got to such a level of stench and ripeness: A logjam that it is not only choking the dynamism of The Bahamas, but raping its people of their life and liberty. We certainly and very seriously need change.
While Moody’s have stated that they are going to reassess The Bahamas within the next 6 weeks with a view in mind to giving us an up or down vote on downgrading our sovereign credit rating from Baa2 to two notches to below to Ba1, with the Ba1 rating in their classification and by standard definition being “non-investment grade and speculative”, there is simply very little anyone can realistically do to convince them otherwise because the situation is just that serious and the time frame is too short and the particulars that bolster confidence are meant to be for the medium to long term.
Ill advised comments from the former Governor of The Central Bank, James Smith, who is also a former Minister of State for Finance and current advisor to the Ministry of Finance, who stated that we should “fire Moody’s”, are unhelpful and to some extent, does more harm than good. Because, instead of owning up to the failures and seeking real, common sense ways and means to digging Bahamians out of this embarrassing and painful mess, the first inclination is to curse and threaten the people that you need to help mend our international image so we can be believable again.
At the same time, you are letting international agencies and investors alike appreciate that the current behaviour and practices that got us to this woeful state of affairs will continue- even if we have to close ourselves off from the rest of the right thinking world, we will do so in order to hide our shame and disgraceful lack of self-control.
What we need now is someone that is interested in shutting off the apparent slush-fund tap on some of this reckless spending, in addition to putting the pedal to the metal with regard to spurring investments and increasing jobs and opportunities for Bahamians.
The first order of business is to stop all of this wasteful, non-capital expenditure spending. The government wastes too much money to get too little done in return. Issues such as ill-advised trips, wasteful gasoline allowances without proper record keeping in addition to food and accommodations for meaningless seminars and functions that have no significant impact, must be brought under some order. All of this must be done before we get to issues such as double and triple invoicing for the same goods, built in contingencies into contracts that are grossly negligent, as well as planning ahead to avoid last minute spending rushes, coordinated by shady vendors that arrange their crooked deeds with government agents on the take. We need to project to Moody’s, and to the world, that we are firmly holding wasteful spending to a bare minimum and we will maintain this trend within the foreseeable future, but they must first see evidence that this is being done.
Secondly, we need to not only announce that we have projects on the drawing board, but approval documents and copies of permits, licenses, a calendar of launch dates and the names of personnel involved in these projects so that they can be verified, need to be on the table at our ratings agencies meetings. By doing so it fosters trust through transparency, as well as it gives confidence that we are doing business above board and we have a firm idea on how to base our growth projections based on sound projects that have at least a likelihood of starting within three to six months.
Thirdly, we must commit to performance indicators and performance based budgeting. We simply cannot take the cookie-cutter approach to the budget process any longer; neither can we afford to keep backward moving projects on the table because we are too prideful to see them discontinued, while we also cannot take an arbitrary approach to which projects we keep or scrap. Performance indicators can be easily done and can be promoted nationwide within a matter of months once the necessary importance is placed on them to do so.
Fourthly, we must find a way to unlock private sector credit again. A plan for such must include the clearing banks, but also greater emphasis on risk matrices need to be mandated. Further, we must utilize business insurance in a more meaningful way in the face of default. New measures that assist with unlocking private sector credit may have sunset clauses attached, but once there is a new idea for shared responsibility for expanding credit between the government and the banks, we can begin to see improvement in the medium to long term. The international agencies must see a strategy in place, even if it may be minimal, and they also must feel confident that steps have been taken and work has started in this regard.
Last, but not least and is certainly as fundamental as the former, we need to revamp the Bahamas Investment Authority with a view in mind to modernizing the investment process and make it more transparent and automatic. In addition to increasing the transparency, we must increase the threshold for projects seeking incentives or approvals and do so beyond the Cabinet level. Too often small, but significant, projects are held up due to unknown or unforeseen administrative constraints that have no explanation or rationale to them. We must liberalize the process and penalize those that slack off on doing their jobs in expediting these proposals without fear and with prejudice. Also, we must prioritize through the public sector chain investments and put personnel in place in each government department that is a part of the investment approval and launch process, from business licensing to construction permits, and have them understand that they are a part of this particular public sector chain and their duties are clearly defined.
These are the issues that ratings agencies like Moody’s and Standards and Poor’s are looking for. This is what they want to hear from a DNA government, or any government for that matter. This is what a DNA government will do and we will see results: Results from credit ratings upgrades in addition to results on the ground in terms of increased employment and opportunities for Bahamians.
Youri Kemp
DNA Candidate for Garden Hills
DNA Spokesperson for the Economy and Finance
© Copyright 2016 by thebahamasweekly.com
Top of Page
|
|
|
|
