Government Urged To Move Wisely On Fiscal Woes
Prime Minister Perry Christie outlined the country’s current fiscal position last week. He claimed the government will need to borrow $504 million to cover debt left by the previous Free National Movement (FNM) government. This figure is much more than the $314 million the FNM government said would be needed to cover our current fiscal shortfall.
Before the end of next fiscal year, our national debt will be more than $5 billion, or a cost of $14,285 per citizen if the debt is paid off immediately. Our debt-to-GDP ratio will also exceed the 60 percent mark before the end of the next fiscal period.
Even more alarming is our debt service requirements. A recent article in The Tribune business section cites Christie as saying that for the fiscal period 2012-2013, the debt service requirements will cost the Bahamian people $328 million, or 18% of our recurrent spending.
According to these figures, our current fiscal health cannot be in good standing. We appear to be on an imminent path to self destruction.
Former Prime Minister Hubert Ingraham summed up our fiscal position quite candidly in a March 20th, 2012 Nassau Guardian article. When asked where the additional millions of dollars needed to complete the grossly over budget road improvement project was coming from he said this: “It will come from the government. Who else will it come from? But the government borrows every month… every month God sends. We never have enough money to pay our bills, never… Every month, the government issues treasury bills and bonds. That’s the reality. It’s not as if the government has a stack of money in the treasury that it can go and pull out”.
This revelation by the former prime minister should cause the hairs on the backs of all right-thinking Bahamians to crawl whether they are PLPs, DNAs or FNMs. I believe that the average Bahamian needs to stop looking at party lines and try to understand the potentially explosive situation that The Bahamas now faces.
The government of The Bahamas does not have a magic wand that it can wave and make our fiscal woes disappear. Our dilemma stems from decades of poor fiscal policy, but the government has several chess moves at its disposal. Here are a few recommendations the government can revisit.
(1) If possible, restructure the current agreement with Morton Salt Company. Millions of dollars are being made annually by this company that mines our salt, which is considered to be amongst the best quality salt in the world.
(2) If possible, restructure the agreement with Bahama Rock. Possibly billions of dollars are being made each year from the export of aragonite, also known as white gold. We receive pennies from the taxation of this industry. In fact the taxes received by the government for these two industries is almost treasonous, and if the average Bahamian knew what we receive annually, they would be stunned by the idiocy of our decisions.
(3) Work feverishly to allow Bahamians to invest in the Bahamas Petroleum Company, and change the current agreement where we will only get 12.5% of the proceeds of oil if it is found in The Bahamas. Allow Bahamians to purchase shares on the stock exchange in this company now. All other nationalities are making money except for the rightful owners of this valuable natural resource.
(4) Start a deliberate campaign to distribute crown land to Bahamians. We all know that the key to wealth is property ownership.
I implore the government to move with haste with any other sensible recommendations in its arsenal to empower Bahamians and rid the country of our impending clash with disaster. The economic hitmen around the world are salivating at the mouth at our current path. We all know what happens if we start defaulting on our loans. We have dug a hole for ourselves and it will be difficult for us to get back on track, but the present government must set the course now and keep the ship steady.
It is shameful, bizarre and a national disgrace that we find ourselves in this current position. We have natural resources that make billions of dollars for foreign companies annually, but we have created an atmosphere where Bahamians are not allowed to thrive in their own country. We have willingly allowed ourselves to be swindled and no government has done a damn thing about it.
I implore Mr. Christie to act now and implement the best solutions to restore our fiscal health, and at the least give us a fighting chance of a bright future going forward.
Dehavilland Mosseconomy, financial