The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Bahamas cannot send the message that it is a “blue chip” financial services centre if Wall Street credit rating agencies are suggesting it cannot manage its own fiscal affairs, the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) chairman believes.

Arguing that the recent sovereign downgrade by Moody’s should not be taken lightly, Chester Cooper said: “We must not take this downgrade lightly. What is most compelling is that after the downgrade, the outlook continues to be negative.

“Although still a fairly decent rating in the sense that it is investment grade, the world is watching. The impact will be that we find it more difficult, and more expensive, to borrow. We cannot effectively send the signal that we are a ‘blue chip’ financial services centre if the Wall Street rating agencies are suggesting that we are not managing our own economy well.”

Moody’s said the key factors behind the Bahamas’ sovereign rating downgrade were limited growth prospects following a protracted recession and weak recovery in tourism and construction; a significant and rapid deterioration of the Government’s balance sheet that was exacerbated by a low revenue base; high and rising levels of debt and a weakening of its debt sustainability metrics relative to peers.

“Moody’s clearly direct the cause to the sustained economic deterioration over the past five years,” Mr Cooper said. “We know the problem and need not rehash it. The time for political talk is over. What we need is a clear set of specific, bold, decisive forward-looking blue prints that clearly outline revenue and expense management targets.

“Discussion on tax reform must be accelerated. Firstly, reform in the archaic processing of existing taxes, like real property tax and Business License taxes, along with the enforcement of same. More importantly, the implementation of new forms of taxation.”

Mr Cooper called for a private sector-style forensic approach to examining expense lines and eliminating waste. “There is no doubt in my mind that we can find a 7-10 per cent cut in expenses through tighter management of the various agencies,” he added. D

“Doing what is politically expedient, however, must be replaced by a sound, prudent, disciplined plan with specific time-lines for execution. Driving economic growth that will expand the economy and, ultimately, its tax base also calls for a proactive ‘open-for-business’ campaign that encourages investments through speedy approvals, bold incentives and proactive policies. The world is competing for the same industries and foreign direct investments, and nipping at our heels. We must wake up running.”