Despite government talk of unrivaled economic performance and unprecedented levels of foreign investment, former Prime Minister Hubert Ingraham said Wednesday evening that two critical measures of economic welfare and fiscal health have deteriorated – the budget deficit and the employment figure.
“How do you explain this increase in government debt and this deterioration in employment numbers in the face of this supposed unrivaled economic performance to which the prime minister refers?” asked Mr. Ingraham, who was contributing to debate on the 2006/2007 budget in the House of Assembly.
In his budget communication at the end of last month, Prime Minister Perry Christie declared that unemployment is declining and will decline “dramatically” further when the major tourism projects in the pipeline reach full stream.
The prime minister also said that the GFS deficit is “firmly under control and we have placed it on a declining trajectory.” He said the GFS deficit will be 1.9 percent of GDP in 2006/2007 as compared with 3.1 percent in 2001/2002.
And Mr. Christie declared, “Any objective observer would be bound to agree that my government team has brought the Bahamian economy from its low point of 2001/2002 when all of these indicators were negative to the present stage where the Bahamian economy has already reached the takeoff point into what could be the longest, highest, and most sustainable economic expansion in the history of the Commonwealth of the Bahamas.”
But Mr. Ingraham sees things differently.
“The welfare of the Bahamian people and the true economic situation [are] not improving,” the former prime minister said. “Economic frenzy is not economic growth.”
Under the Christie Administrationﾒs four years of “so-called unequalled economic growth”, the accumulated GFS deficit amounted to 11.5 percent of GDP, he said.
“This is unequalled in recent history,” Mr. Ingraham said. “During the period of truly unrivaled economic growth in 1996 to 1999 the accumulated GFS deficit amounted to 6.9 percent of GDP.”
“On the other hand,” he added, “during the period of this administrationﾒs supposed unrivaled economic growth, employment actually increased by 1.1 percent. This according to the information contained in the budget statement.”
He noted that between 1996 and 1999 unemployment dropped by 3.1 percent.
“This is the true measure of real economic growth,” Mr. Ingraham said.
He said that at the end of 2001 unemployment stood at 6.8 percent and government debt was 31 percent of GDP.
At the end of 2005, according to the Department of Statistics, unemployment stood at 10.2 percent.
“That is an additional 2,000 souls!” Mr. Ingraham declared.
He added that government debt was 37 percent of GDP last year as compared to 31 percent in 2002. Mr. Ingraham said that is a difference of $434 million.
“In fact, government debt is projected to rise further to 38.8 percent of GDP by the end of this year,” Mr. Ingraham said.
“One of the critical issues in the major increase in government borrowing over the past four years is that it was not primarily for capital development. In point of fact, it was the financing of a huge recurrent deficit, that is, for the financing of recurrent expenses.”
He also told House members that in the last four years, the recurrent deficit [added] $346 million to the government debt.
Mr. Ingraham said, “There is to a very great extent the illusion of high economic growth led by a constant reference to projected investments, investments in train, or investments shortly to be in train; the foreign sales of considerable amounts of Bahamian land without the associated investment project, and excessive credit growth.”
The former prime minister added, “Investments which will shortly be in train do not create employment. The sale of Bahamian land does not of itself create economic growth; it increases the price of land, but it does not expand the economy.”
He asserted that much information has been uttered in relation to the governmentﾒs deficit, government borrowing, the state of the public finances and the economy.
“Honourable members who choose to be informed, to be knowledgeable about these matters may easily do so,” Mr. Ingraham said. “All they have to do is read, and, if they do not understand, ask questions of those who know.”
By: Candia Dames, The Bahama Journal
