The Tribune

By DANA SMITH

Tribune Staff Reporter

dsmith@tribunemedia.net

FNM Senator Zhivargo Laing has criticised the government for “not showing any willingness” to tackle the country’s present financial situation and a predicted deficit of more than $500m.

The former Minister of State for Finance accused the government of increasing the debt with spending and said more steps need to be taken to reduce expenditures.

“A number of things have to be done to improve the trajectory of our debt situation, going forward, so that we’re not having as large a deficit as we are currently having, and therefore growing the debt at the rate that it is now growing,” he said.

“Those steps have to be taken and every indication so far... is that the government has not shown any willingness by its actions to do anything about the financial situation of the government.”

Mr Laing hit out at the size of the government’s Cabinet and criticised “vague” allotments in the budget as examples of expenditures that could be cut.

“There is a $15 million allocation in the Prime Minster’s budget for who knows what. For the implementation of the contract for governance, or whatever, that’s a vague allocation. It makes no sense,” he said.

“Governance is governance and knowing your spending is a part of your governance programme. So get rid of that, that’s a $15 million reduction.

“You can talk about reducing the size of the Cabinet – but not targeting any one particular ministry – it’s a very large Cabinet. But there are other areas of savings. For the first instance, the government has hired all kinds of persons, given all of kinds of consultancies out. Well that’s cost of the government – that’s expenditure they could control... The reality is, a $550 million deficit is not a deficit we need to have.”

Mr Laing also hit out at the PLP for their criticisms concerning the way the FNM handled the budget while they were in office – such as borrowing money, and questioned what the government will do differently.

“They seemed to rebuke us for doing those things which are standard parts of trying to prevent financial (challenges),” he said.

“If you listen to that language, you wonder what will they do now. But the reality is, there is no choice now. There’s no choice. The Bahamas has to prevent itself from falling off a fiscal cliff, so to speak.

“They were the ones who said that we were headed in the wrong direction and the deficit that we had was too big – but yet come and produce a deficit bigger than the one they met. Now it’s time to stop stalling and blaming and start governing sensibly.”

The Senator also warned of the ramifications of another downgrade and stressed the significance of international credit rating agencies for investors and lenders.

“If you have another downgrade then you’re looking at additional costs of borrowing or difficulty with borrowing. That’s the reality,” Mr Laing said. “The downgrade in this instance, they’re only downgrading our economic outlook, but if they downgrade your credit rating then you’re looking at a more costly situation when it comes to persuading others to buy your debt.

“Because we are going to have to continue to borrow – let there be no mistakes about it. Maybe not at the same rate, but we are going to have to borrow. When your rating goes down, investors ask you to pay more for the same level of service. That’s reality. But more importantly, that’s how S&P sees us or how Moody’s see us – it’s what our situation is.”

Government revenue has not been performing well since the recession and it will continue to be “sluggish” in light of the global economic situation, he continued.

“Therefore to continue to ignore that and to continue to increase spending in the face of that is courting disaster. Bahamians have to be concerned with that. Blame the FNM all you want – fine, we’ve been kicked out of office for whatever breaches we did, if that’s what one thinks. (But) the reality is, Mr Christie’s in charge now. It is his responsibility and there has been no action taken to correct the situation.”