The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A leading businessman has predicted a further Wall Street downgrade of the Bahamas’ sovereign credit rating within the next 18-24 months if the Government does not move quickly to get its fiscal house in order, saying: “We have been living on borrowed money long enough.”

Dionisio D’Aguilar, SuperWash’s president, told Tribune Business he was “not surprised” at the country’s latest credit rating downgrade by Moody’s, from ‘A3’ to ‘Baa1’.

“I’m not surprised, and I predict that we will be downgraded again in the next 18-24 months because no one is getting real about this problem. The Government, in this five-year term, has to correct this astronomical deficit,” said Mr D’Aguilar.

He charged that the Government was afraid to make the “unpopular” decisions to reverse the fiscal position. “The problem is that the Government is scared to tell the people that they cannot afford to live the way that they are living and that we have a few choices,” Mr D’Aguilar said.

“One, we have to raise taxes, cut spending drastically or a bit of both. The Government is afraid to raise taxes and cut spending. They are hoping that the economy grows and we grow out of it, but that won’t happen. It won’t grow as fast as they expect it to grow, and the deficit will persist. It’s very unpopular to raise taxes and cut spending, but it’s certainly more unpopular when our economy turns into what we see in Greece. The Government has to make some hard and very unpopular decisions to get their fiscal house in order.”

Mr D’Aguilar added: “A lot of people will say we pay too much taxes now, and if we cut spending a lot of people will go out of work, and there lies the difficult decision of being a politician. They stood up, they wanted to be elected, they got elected, now make the tough decisions.

“Those decisions won’t get you re-elected, but at least the country will be in a better fiscal position. You have to put the nation before politics. Governments feed on being re-elected, and that’s why they won’t make the tough decisions. In England they are making them, and in Greece they are being forced to make them. It’s going to be three or four years of pain, and that’s why you do it now. The first three years will be painful but at least in the last two years you will start to see recovery.”

“The average Bahamian doesn’t care about this downgrade,” Mr D’Aguilar added. “They don’t understand it. We have entrusted our economy to 20 or so people in the Cabinet, and they have to make decisions that are in the long-term best interest of the country. We need to make them, and we need to make them now.

“You can’t spend any more and borrow any more.Everything is borrowed to the maximum. We have been living on borrowed money long enough. It’s time for some tough decisions. It doesn’t make sense for us to grow on borrowed money, and Moody’s and S&P are all sending us the signs,” Mr D’Aguilar said.