The Tribune

By NATARIO MCKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Government needs to articulate a clear strategy for reviving the Bahamian economy, the Free National Movement’s (FNM) chairman believes, arguing that the Christie administration’s approach appears to be a “combination of smoke and mirrors” without specifics.

Darron Cash, whose comments followed Moody’s recent assessment that the Government’s plans to balance the Budget by fiscal year 2016-2017 were “overly optimistic”, said: “This recent downgrade ought to be a very clear signal to the Prime Minister, who is the minister for finance, that to date they have not inspired confidence in the international community with how they propose to manage the country’s fiscal realities.

“Our concern continues to be that there is an absence of a clear strategy to move the economy. At the moment the approach appears to be a combination of smoke and mirrors in the absence of meaningful specifics.

“We think that the comments made by the international rating agencies about the level of unrealistic and high expectations underscores the fact that the Government has no clear plan,” he added.

“We are particularly concerned that to date the Prime Minister has not come clean on what he proposes to do with regard to the extent to which they have plans to reduce the level of the public service, and make significant adjustments to the public service and government agencies in general.”

Providing further insight into the reasons behind its recent decision to downgrade the Bahamas’ sovereign credit rating, Moody’s said the Christie administration’s fiscal forecasts were based on GDP growth rates, and debt servicing costs, that were “too favourable” given historical trends.

Wall Street believes the Government’s plan to balance its Budget by 2016-2017 is “overly optimistic”, as it requires an “unprecedented” positive swing of almost $400 million on the primary side alone.

The Wall Street credit rating agency said the Government’s ‘balanced Budget’ plan was based on the Bahamian economy achieving a nominal average GDP growth rate of 3.5 per cent per annum between now and the 2016-2017 fiscal year.

“Moody’s understand that in order for the Government to attain what it wants to do, there is need for significant adjustments,” Mr Cash said, “but we have yet to hear what Mr Christie proposes to do, except that you have already seen from average middle class Bahamians that what the Government is proposing to do with respect to the significant increases in real property taxes is to balance the Budget on the backs of people who are already stretched to the limit. We think that is a questionable approach they ought to reconsider very carefully.”

Mr Cash added: “The opposition is eager to hear about policies and programmes to grow the economy and create employment, while at the same time minimising the National Debt.

“We are anxiously waiting to hear how they will achieve this independent of a turnaround in the US economy. The keep pointing to tax reform but have taken no specific position on it. They point to some of the touristic developments they hope will come on stream, but are inadequate in total in addressing the fiscal challenges that the country faces.”