RESPONSE TO STANDARD AND POOR’S DOWNGRADING OF BAHAMAS’ ECONOMIC OUTLOOK
25 September, 2012
The Free National Movement takes note of Standard and Poor’s decision to downgrade The Bahamas’ economic outlook from stable to negative. This downgrade is a direct indictment on the Progressive Liberal Party’s handling of the nation’s fiscal affairs since coming to office.
It is a clear indication that Standard and Poor’s sees no evidence that the PLP administration is seeking to change the direction in which the government’s financial situation is going.
Prior to the last election, the PLP in opposition was vociferous about the level of the country’s deficit and growing indebtedness, ignoring at every turn the serious impact that the worse global economic and financial crisis since The Great Depression was having on the country.
This notwithstanding, the PLP came to office and produced a planned deficit of $550 million after complaining that the FNM had left an extraordinary deficit of $504 million. It came to office and appointed the largest cabinet in the history of the country.
It came to office and appointed scores of highly paid consultants and committee chairpersons. It has spent millions of dollars pushing down bushes and trees that are likely to grow back from a lack of development on those properties. It has stashed away $15 million in the Prime Minister’s budget for some nebulous implementation of their Contract for Governance.
The level of waste and spending taking place is phenomenal and the comfort that the Christie administration wants the people of The Bahamas to take is that it is the FNM’s fault. They want the Bahamian public to believe that they are powerfulness to control spending, notwithstanding that they have cancelled scores of contracts of persons they believed to be FNM contractors; they have terminated or not continued the contracts of scores of government employees believed to be FNMs; and they have put on hold a number of programmes put in place by the FNM, such as Jump Start and Fresh Start.
If they have the power to do these and hand out millions upon millions of dollars in contracts to their political cronies, then how is it that they cannot take steps to reduce the government’s deficit?
The reality is that the PLP has made no effort to curb spending. It has no plans of its own to enhance revenue. It shows no courage to make the hard decisions necessary to reverse the country’s fiscal direction. It is hoping that the US economy improves and some foreign investors will come produce growth for this economy.
It is hoping that Bahamians will continue to buy their lame excuse that it is the FNM’s fault and that if it had enough time since election to produce a budget of its own, then things would have been different. This is the same old indecisive, lazy and confused governance that they practiced before. Even the initiatives that they now claim are suppose to address the fiscal situation going forward are the brain trust of the Free National Movement administration. These include:
· The Debt Management Committee;
· The Real Property Tax Reforms;
· The Value Added Tax Programme;
· The Modern Government Procurement Programme; and
· The Customs Modernization Programme.
It was the Free National Movement Administration working with international institutions such as the IMF, the IDB and the CDB that took steps to initiative these fiscal reform programmes.
It was the FNM that commenced investment promotion missions, starting in Canada, to promote economic growth in the country through inward direct foreign investment and introduced a new Business Licence Act and 24/7 E-Government to enhance how we do business in the country.
Indeed, it is the FNM that increased substantially investment in our nation’s infrastructure (airports, roads, waterway, ports, etc.) to improve the long term growth prospects of our nation.
Standard and Poor’s has given the PLP administration a warning shot. The FNM urges the PLP to heed the warning. The FNM urges the PLP do quit with the blame-game and take real steps toward fiscal reform. Most immediately, the PLP must curtail the erratic spending that it is doing in order to both ease the serious cash crisis it is developing and to begin to reduce the planned deficit that it has.
The Government had better wake up; for the world is not naïve; Standard and Poor’s; and the other international rating agencies are not naïve. They are looking for evidence of change in fiscal behavior, not rhetoric.
The Government must be upfront with the Bahamian people and let them know that tough decisions must be made.
They must confess that lavish promises simply cannot be kept. They must let them know that it is time for steps to be taken to rein in the deficit and change the trajectory of our fiscal path.