The Tribune

By NATARIO McKENZIE Tribune Business Reporter nmckenzie@tribunemedia.net A GOVERNMENT minister yesterday acknowledged that the Bahamas needed a fiscal"rebalancing" given its $4.25 billion national debt, with the Ingraham administration trying to nurture the economic growth necessary to achieve a turnaround. Zhivargo Laing, minister of state for finance, told the Bahamas Business Outlook conference that consistent with the International Monetary Fund's (IMF) projections, the Government was projecting the Bahamian economy would grow between 2.5-2.8 per cent this year. Mr Laing said: "We have to have a charge toward rebalancing. We cannot, and no one should expect us, to continue along this line of borrowing. We fully appreciate the need to rebalance. "That rebalancing is going to require some growth on our part. The economy is going to have to grow faster in order to support our efforts to rebalance our fiscal situation. We are trying to do some things to nurture this growth, and even accelerate it where possible. "There is going to have to be some reforms in our fiscal regime to improve our revenue yields and to make taxation a less aggressive reality in the Bahamas. We have to rebalance our fiscal situation." Mr Laing said that while the country's debt profile has changed, the Bahamas has a relatively low debt-to-GDP ratio when compared to others. While noting that the Bahamas' saw economic growth to the tune of 2 per cent last year, Mr Laing said the Government expected further growth this year, attributing this to improved tourism numbers and increased construction activity. He added: "Last year we grew by an estimated 2 per cent, with a slight decline in unemployment to 13.7 per cent. Looking forward we forecast that the Bahamian economy will grow by 2.5- 2.8 per cent this year, and this is consistent with what the IMF is also forecasting for the economy. "That notwithstanding, unemployment will likely remain in the double digits, but there is the expectation that there will be some continuing decline from the 13.7 per cent recorded last year. We expect to sustain that growth trajectory with 2.4 per cent in 2013, 2.3 per cent in 2014, the caveat being no realisation of some of the downside risk that exist in the global economic environment." Mr Laing said: "We believe the growth is going to come from improved - and improving - tourism numbers, both on the cruise and stopover counts. We also believe that the increase in construction activity in the private sector is going to support this growth." Mr Laing said that to date the Baha Mar developers have spent some $84.2 million on contracts with Bahamians, and hired some 1,466 construction workers. "It is expected in 2012 they will invest some $831 million, with some $206 million in additional sub-contracts to Bahamian employees," Mr Laing said. He added that the developers of the Albany project expect to spend some $218 million in the first quarter, and have already spent some $500 million on the project." The Minister said the Government in the last six months has approved some $16.8 million in concessions. Speaking on the government's job readiness programme, Minister Laing noted that some 3,000 workers have been hired under the programme to-date. "They are injecting already into the economy on a weekly basis the order of $600,000, that's new money. That amounts to about $33 million that would have been injected by them over the 52 weeks," he said.