Bahamas Faces Difficult Economic Choices Complicated by Poor Governance

Friday 09th, May 2014 / 09:37 Published by

perfect-storm-smIt’s difficult for a layman like me to figure out how this struggling $8 billion economy can withstand all that is coming down the pike – without a substantive improvement in governance and political collaboration, which doesn’t appear to be in the cards.

It looks like a perfect storm of economic and fiscal challenges is descending on our heads – due mostly to the long-term avoidance of hard choices by one administration after the other in the interest of political expediency.

As we slowly recover from the great recession, our battered little economy faces significant obstacles. And those who have the responsibility to address these issues don’t want to talk about them. Instead, we are fed a daily diet of childish, and often vicious, political propaganda.

What am I talking about?  Well, let’s start with the issue of the day – taxes. And not just taxes, but wholesale tax increases, including value added and/or payroll tax, higher National Insurance payments, higher property taxes, higher business licence fees, a proposed 5.3 per cent National Health insurance payment, and who knows what else.  In fact, the IMF prescription for the Bahamas to be able to maintain its currency peg with the US dollar is to spur tourism growth (our main export) while “containing demand through fiscal consolidation” – meaning more taxes to soak up liquidity and curb imports.

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