The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

FISCAL prudence must be the "order of the day" for the incoming Progressive Liberal Party (PLP) administration, with one private sector leader warning yesterday: "No one is going to bail the Bahamas out."

Dionisio D'Aguilar, in an interview with Tribune Business, said that with the Ingraham government undertaking an "orgy" of expenditures, there was a pressing need to balance the Budget and reduce deficit spending.

A report by the International Monetary Fund (IMF) last December noted that failure to rapidly implement tax reforms "could jeopardise a sustained recovery" in the Bahamas. It also warned that the Government's plans were "not sufficient" to reverse a rising $4.356 billion national debt and fiscal deficits set to average 4.25 per cent of GDP over the next four years.

Mr D'Aguilar told Tribune Business: "Someone has to breathe some sense into this process. No one is going to bail the Bahamas out. I think everyone realises the previous government was on an orgy of expenditure.

"We can't borrow any more. We have been on an orgy of expenditure, and we need to catch ourselves now. Fiscal prudence should be the order of the day. Start balancing the Budget and reduce the deficit."

With that said, Mr D'Aguilar said the new government may find it a tough task to live up to many of its promises.

"Everyone wants to live on promises. The pervious administration put so much in motion there is nothing you can do. You have to upset some of your electorate because you didn't realise that when you got to the Treasury it was worse than you thought," Mr D'Aguilar said.

"Politicians unfortunately judge their performance based on what they have built for you. No one talks about what they did on education and crime because you can't touch and feel that."

Mr D'Aguilar said the new government should look at addressing the country's taxation system. "It's hard and a tough cookie to crack, but we have to address our system of taxation. We have to begin the process of going to a value-added tax (VAT). The tax base is too small, and the taxes on that tax base is too high. That's a major undertaking and major change in philosophy," he added.