Rt. Hon. Perry G. Christie/ Opposition Leader.
Nassau Bahamas – At a press conference on Sunday, former Prime Minister and leader of the Progressive Liberal Party charged that the FNM government of the Bahamas has recklessly mismanaged the economy of the Bahamas with raising unemployment and slowing growth in the country.
PLP CHRISTIE: Ladies and Gentlemen:
We have invited you here today to report to the Bahamian people on the gravity and implications of the slow down in the Bahamian economy.
After hearing concerns from professionals in the country such as architects, lawyers, bankers, contractors and, of course, the ordinary man on the street, we felt obliged to disclose the facts about the short term economic outlook for The Bahamas.
By today’s intervention, we hope to spur the government to take necessary action to change the current downward trend of economy of The Bahamas.
In May, 2007, when the Progressive Liberal Party left office, we left an economy that was vibrant.
In his budget Communication, the Prime Minister acknowledged the success of the PLP in managing the economic affairs of The Bahamas. His words were that the economy was in “good shape”.
This was due to the foresight, planning and dedication of my Administration over the past five years and the PLP’s vision for the Bahamian economy.
The Progressive Liberal Party Government left in place external reserves at a level of $682 million, excess liquidity in the region of $250 million, unemployment headed toward virtually the lowest possible level and an economic growth projection of 4.5% for the year 2007.
During the past six months, we have seen the external foreign reserves reduced to $460 million, a reduction of more than $220 million; we have seen our excess liquidity decrease to $130 million or less, a decline of $120 million. We have no doubt, from the cries for help that we hear from the average man on the street, that unemployment is also on the rise.
This is due to factors including, but as we shall explain not limited to, the reduction in construction related jobs and the many Bahamians victimized through being terminated by this Free National Movement government.
No less an authority than the Governor of the Central Bank, has forecast that economic growth for 2007 will more likely be downgraded to 3%, a reduction of 1 ½% from the time the PLP left office six months ago.
The International Monetary Fund confirms that the economy has significantly slowed.
I am advised that this decline of 1.5% translates into a direct negative impact of $100 million on money in circulation. Less jobs, less opportunities for all.
The reasons lie squarely at the feet of this FNM administration.
Firstly, the Prime Minister must have assumed that what the PLP government accomplished in the prior five years was automatic – that he could act unwisely, imprudently and without proper planning and that the good times the PLP created would just continue.
A brief look at key sectors of our economy will show the FNM’s blunders.
Let’s begin with tourism. Notwithstanding the emerging challenges in the tourism industry, this FNM government – in real terms – has in fact reduced the funds available for the promotion of our number one industry.
Thus, this week we saw our Director General of Tourism publicly appealing to the Government to correct their error and increase the budget. The Government has said nothing and showed no sign of even listening to this appeal even though it came from such a significant source.
Let’s look at the financial services sector. When my government created the Ministry of Financial services it was to focus all relevant public and private sector resources on building that sector.
The creation of the Ministry of Financial Services dramatically demonstrated to professionals at home and abroad that we were serious as a country about our commitment to that sector.
There is much evidence that it worked. Unwisely, the FNM dismantled that Ministry.
The FNM government has clearly not treated the important and positive impact of Foreign Direct Investment on our economy with the significance which it deserves.
It is not a faucet that one can simply cut off and then turn on when one wishes.
Given the importance of communicating its understanding of the economy, an incoming government could, of course, have taken a short time to familiarise themselves with agreements in place.
What they did not need to do and should not have done is to give notice to the world that all contracts were on hold pending government review.
This approach was unwise, immature and unbecoming of a modern Bahamas competing in the global commerce market.
The FNM government has unwisely and unnecessarily placed The Bahamas at dangerous risk of looking like amateurs in the eyes of the international commercial markets.
The Bahamas could now appear to the outside world as if we – as a country – are not serious in dealing with the business of foreign investment.
For this, we condemn the FNM government and for this, they should be ashamed.
Since the election, we have raised grave concerns about the financial and economic impact on our economy caused by the unceremonious review, suspension and in some instances, the cancellation of some $90 million worth of contracts that were legally entered into by the PLP Administration.
We have stated that the suspension and/or termination of commercial contracts entered into by my Administration and awarded to Bahamians was an extremely dangerous precedent for any Government.
This act undermined the integrity of the Bahamian Government and its people and provided a powerful negative impact on the Bahamian economy.
For this also, we condemn the FNM government and for this, they should also be ashamed.
By engaging in this behaviour, the FNM have effectively said to the Bahamian people that the bond of the Bahamian Government means nothing; the paper on which a contract is signed with the Bahamian Government is worthless and of no consequence.
The behaviour of the FNM government has sent unprecedented economic shock waves throughout the Bahamas; lost jobs; lost entrepreneurial opportunities; a negative impact on the Bahamian way of life as we know it.
To add injury to insult, the Rt. Hon. Hubert Ingraham and the FNM Government took it upon themselves to review and renegotiate contracts legally entered into by the Bahamas Government on behalf of the people of The Bahamas with foreign investors thereby shaking at its base the level of confidence these investors had placed in the Bahamian Government.
For the first time in our history, potential investors may, when assessing the risk associated with the Bahamas, now view us as a political risk if when one Government is removed from office, the incoming Government renegotiates various terms of the agreement.
We have objected before to the overly ambitious $1 billion in land sales that was projected as part of the FNM’s 2007/2008 budget. The figure is in serious doubt.
We believe that the FNM Government will have to adjust its revenue projections downward thereby negatively impacting all of the financial indicators related to our economy.
Early last week, the minister of state for Finance tried to dismiss the fact that the downturn in the economy was in any way related to inaccurate or poor decision making on the part of the FNM Government.
Instead, he attempted to shift responsibility and blame to the apparent softening of the U.S. economy.
During the same week, however, the Governor of the Central Bank, referred to reports from the U.S. Commerce Department stating that the U.S. GDP grew to 3.9% during the third quarter of 2007, the most in more than a year.
It is obvious from this statement that the U.S. economy cannot be blamed for this slow down.
Indeed, based on the position of the economy when the PLP left office, this economic slowdown cannot be blamed on the PLP.
This is the first time in the history of The Bahamas that anyone can recall that the Bahamian economy has actually slowed down ahead of the U.S. economy.
The blame for this must rest solely at the feet of Hubert Ingraham and the FNM Government.
A pattern is clearly being established with this Government as it relates to the management of our economy.
You will recall that, based on the steep, steady decline of our rate of growth from the year 1999 to 2002, the then Governor of the Central Bank stated that the then FNM Government had “squandered” an opportunity to grow the Bahamian economy to its fullest potential.
When the FNM left office in 2002, the projected growth rate was less than 1%. It now appears, as it has in so many instances since May 2007, that history is repeating itself and the FNM Government are again squandering a golden opportunity to not only sustain the growth and momentum that the Bahamian economy enjoyed based on the policies and developments left in place by the PLP.
The FNM government has now gone further by negligently allowing the level of projected growth in our economy to fall.
Unfortunately, in their political lust for discrediting my Administration, Hubert Ingraham and the FNM have put their focus on petty politics and an agenda of victimization, intimidation and fear.
In their pettiness, the FNM government have neglected and ignored their responsibility to effectively manage the Bahamian economy for the benefit of the Bahamian people.
We therefore feel that it is the obligation of the Government to notify the Bahamian people of the facts as it relates to are economy and the impact these facts will have on them, which are simply:
1. That Foreign Direct Investment has slowed considerably.
2. That our external reserves and liquidity are uncomfortably low.
3. That as a result of these low levels there has been a slowdown in bank lending and bank commitment fees have increased thereby further impacting our construction industry and the internal expansion of our economy.
4. That based on the level of our external reserves we have less than 2 months worth of reserves to meet our monthly external payments of approximately $250 million.
5. Unemployment is on the rise.
6. Investor confidence has been negatively impacted and the renegotiation of various heads of agreement has exposed the government to litigation among other things.
7. That Bahamians must now tighten their belts and control their spending until the economic indicators show signs of improvement.
By insisting on stalling, deferring and delaying all the projects that the PLP left in place, the FNM has slowed the economy and potentially exposed the people of The Bahamas to liability for breach of contract.
We note with some satisfaction the progress made by the Harcourt Group and its international partners on a return to health of the Royal Oasis properties in Freeport, which arrangements we left in place.
The FNM government can and should now move to rectify their mistakes with the economy by facilitating those development proposals which we approved while in office and others that were left for them in the pipeline.
I now call upon the government to stop immediately this economically ruinous policy of stall, defer and delay.