The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman said yesterday that the private sector was concerned that any further downgrade in the Bahamas’ economic outlook could potentially make this jurisdiction a less attractive place to do business.

Chester Cooper also called for a zero-based budgeting approach was needed to eliminate waste and cut expenses aggressively.

His comments came after  Standard & Poor’s (S&P), the international credit rating agency, in altering its previous ‘stable’ outlook on the Bahamas, warned that a further downgrade to this nation’s sovereign credit rating is in the offing if the Government fails to develop a credible “medium-term plan” to slash the fiscal deficit and sharp debt-to-GDP rise.

The Bahamas’ ‘BBB/A-2’ sovereign credit ratings remained unchanged, meaning this nation will not have to pay more interest servicing costs on its foreign-held debt - for the moment.

Mr Cooper told Tribune Business: “The downgrade in outlook is analogous to the ‘chickens coming home to roost’. We cannot continue to borrow like there is no tomorrow without regard for the financial realities.

“S&P in its press release has singled out a particular concern about the cost over-runs on the New Providence road improvement project. This speaks to the need for greater efficiency in the management of public affairs.”

Mr Cooper added: “Successive governments in the past seem to take the view that this dilemma will fix itself. What we need is a private sector zero-based budgeting approach, where we re-build the Budget from the ground up.

“This will allow us to eliminate waste and cut expenses fairly aggressively, and I am not talking about reducing the size of the public service here, but normal operational efficiencies.

“In simplistic terms, with a total expenditure in the region of $1.8 billion, a reduction by a mere 7.5 per cent  would free up in excess of $135 million to allocate to debt reduction, or to build schools, hospital and support the development of SME’s.”

Mr Cooper said he was eagerly anticipating some tangible, long-termed and focused initiatives for fiscal reform.

“We simply cannot continue to do the same thing over and over and expect different results. It’s simply insanity, to borrow a cliche. These continue to be extraordinary economic times that require bold, creative and extra-ordinary solutions,” said Mr Cooper.

The Chamber chairman said the Bahamas must initiate “revolutionary tax reform”.

“We cannot consistently tweak the usual Stamp Tax and user fees and expect extraordinary increases in Government revenues,” said Mr Cooper. “

The real story here, of course, is that cognizance is required as any further slide will make it more difficult and more expensive for the Bahamas to borrow, and potentially make us a less attractive jurisdiction to do business from an international perspective, as it relates to financial services and FDI.

“The business community is particularly concerned from this perspective. Whilst expansion of the economy through foreign direct investments, unlocking domestic investment and the creation of new industries for the ultimate expansion of the economy is the ultimate goal, we need well–considered, proactive and disciplined fiscal measures with a view to maintaining and, ultimately reducing, deficit levels in the short to mid-term,” Mr Cooper said.