The Tribune

EDITOR, The Tribune.

I was deeply troubled but not at all surprised after reading an article in Guardian Business saying that the international credit ratings agency Moody’s had projected that The Bahamas’ debt-to-gross domestic product (GDP) ratio will swell into the 60s this year and could eclipse 70 per cent within the next few years.

According to one dictionary, a debt-to-GDP ratio is a measure of a country’s federal debt in relation to its gross domestic product. The higher the debt-to-GDP ratio, the less likely the country will be able to service its debt.

Now, I am not a David Ricardo when its comes to high finance and economic science, but even a layman such as myself knows that when a country has a 70 per cent debt-to-GDP, it is on the precipice of financial ruin. For what it’s worth, The Bahamas is flirting dangerously close to financial ruin. At the rate we are on, we will soon hear rumblings of a dollar devaluation from the International Monetary Fund.

The much touted value added tax that the Progressive Liberal Party (PLP) administration will be seeking to implement in 2014 may very well be too little, too late.

The major issue that Bahamian governments have been facing for years now is an ever shrinking revenue base and a myriad of financial obligations.

The civil service workforce, which now exceeds 20,000, continues to be a giant albatross around the necks of the taxpayers of this country. How much longer will The Bahamas be able to meet the massive payroll of the civil service? Time will be the tell. In the meantime, however, the PLP government must now will itself to rein in spending if it is to prevent the further deterioration of our already anaemic economy. But I will not hold my breath for this. In layman’s terms, Moody’s latest assessment of our economic health simply means that the Treasury is popped down.

In other words, the Bahamian government is nearing broke.

For years now politicians from both sides of the political aisle have warned us of this day coming. And alas, it is almost here. If one was to take Moody’s words at face value, then we can safely say that, sooner or later, the chickens will come home to roost.


KEVIN EVANS
Freeport,
Grand Bahama,
May 28, 2013.