The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday urged to take the “lead” in shrinking its annual expenditure by $100 million, a leading businessman arguing that specific cuts would give the Bahamas “more credibility” with Wall Street and the International Monetary Fund (IMF).

Franklyn Wilson, the Sunshine Holdings and Arawak Homes chairman, told Tribune Business that “every politician in the Bahamas” should be required to identify precise areas where the Government could save taxpayers money via spending cuts.

Suggesting this would be better than the normally ‘vague’ statements given by successive governments about reducing waste and inefficiency, Mr Wilson said cutting expenditure by $100 million - a sum equivalent to more than 1 per cent of gross domestic product (GDP) - was “not unrealistic”.

The Arawak Homes chief, a well-known supporter of the Progressive Liberal Party (PLP), added that the Government would find it impossible to “grow its way to a balanced Budget”, and that a combination of spending cuts/revenue increases was also required.

And he also backed Moody’s assertion that the Government’s goal of balancing the Budget by 2016-2017 was ‘overly optimistic’, saying the Wall Street credit rating agency’s position was “quite reasonable” given the Bahamas’ track record.

“It would be good if the Government could lead an initiative in the area of expenditure,” Mr Wilson told Tribune Business.

“Say if we wanted to shrink $50 million of government expenditure, $100 million of government expenditure - not nebulous-type stuff, but what programmes, what activities is the Government spending $100 million on today which the country ought not to be spending?

“That’s the type of conversation we need to have. It would be helpful. Identify $100 million worth of government expenditure, which we would say we’re only spending for fluff or results we are not producing.”

The sum of $100 million is equivalent to 5.5 per cent of the Government’s total $1.821 billion recurrent spending in the 2012-2013 Budget. Throw in $401.877 million worth of capital spending, and it is equal to 4.5 per cent of the total $2.223 billion Budget.

“I wish every politician in the country asks the question: ‘Where could we find $100 million of savings, shrink government expenditure by that much, rather than this nebulous stuff about cutting waste and inefficiency,” Mr Wilson told Tribune Business.

“If we get that type of conversation, now we can do something. Moody’s and Standard & Poor’s, if they saw us cutting by this much, it gives this whole thing more credibility.”

Responding to Moody’s concerns that the Government’s fiscal forecasts, and their underlying assumptions, were ‘too optimistic’, Mr Wilson said: “If one goes on the basis of history, one has to say those views are quite reasonable.

“In other words, we’ve not achieved what is being projected; it’s not been done in recent times. If it’s not been done in recent times, why should we believe you will do it in the immediate future? That’s not illogical to ask.

“The bottom line is that if we’re going to get our fiscal house in order, action has to replace talk. It has to involve action on two tracks; tax reform and a serious review of spending.

“We just cannot grow our way to a balanced Budget. That’s not credible.”

On the positive side, Mr Wilson said there was “sufficient consensus” within the Bahamas - aided by the likes of Moody’s and Standard & Poor’s - that the Government’s fiscal woes needed to be tackled.

“I can’t foresee the Government running deficits at the level we’re doing. It’s not sustainable. We’ve got to do something about it,” he added.