The Tribune

THE SEEMINGLY cavalier attitude of this government towards the urgent need to cut costs rather than to add to the deficit by creating more jobs for “the boys”, has left even foreigners concerned for the future of this country.

There is a growing belief that warnings issued by Moody’s and Standard & Poor were prompted more by the belief that this government was not taking the economic situation seriously rather than the belief that the problem was so serious that it could not be averted even if it were under better management.

“I wager if this were the Ingraham government,” said one observer, “the warnings would have been far different — at least there would have been a more hopeful message that the government was on the right belt-tightening path to avert the danger.”

It is hoped that by now Government is aware of the mortal blow it has dealt to investor confidence in this country as a result of its bizarre treatment of the Cable & Wireless contract with Bahamas Telecommunications.

Although Prime Minister Christie seems to be a man who will go with the flow to avoid a head-on collisions with his colleagues, we do not believe he is a man who can look one in the eye today and honestly say that he truly believes that his government’s attempts to strong-arm Cable & Wireless into becoming a junior partner in a contract that had made it the majority shareholder was the right move to make. Mr Christie has been in parliament long enough to know that one government does not break a contract of a previous government if it wants investors to believe in its country’s stability. Mr Christie, instead of having the strength to stand up and say “no” to his headstrong colleagues, went along for the ride. We predict that it is a ride that he will soon regret.

And now it’s the apparent mismanagement of National Insurance.

As one foreigner pointed out recently to one of our senior staff:

“National Insurance is the only institution left in this country that has any money and has been a success. All of the other government departments have been dismal failures and are financially broke. If NIB gets into the wrong hands then that will be the end.”

Several persons saw the present NIB argument as a greedy grab for the apparent pot of gold.

“With assets of over $1.6 billion,” reported the ninth actuarial review of the National Insurance fund, “NIB may appear to be an institution that can afford to hire more people than it needs, pay more for contracts than another organisation would, and invest in securities where the risk-reward tradeoff suggests that it is not prudent to do so. This is not the case. For NIB to consistently deliver on its future obligations without having to levy exorbitant contribution rates in the future, a firm commitment to implementing and following a good governance framework at all levels is required.”

The report said that “due mainly to the effects of the global economic crisis and a recession locally, NIF finances under performed the projections of the 8th Actuarial Review. As unemployment increased and many full-time employees worked reduced hours, contribution income was negatively affected while benefits and administrative costs continued to increases. During the five-year review period the number of contributors declined while the number of pensions increased. Although benefits exceeded contributions in some years, the Fund experienced net surpluses in each each year resulting in benefit reserves increasing from $1.42 billion at the end of 2006 to $1.65 billion at the end of 2011.” The report’s assessment of National Insurance policy and design indicators suggests that current contribution and benefit provisions provide a very good level of benefit adequacy and income protection to most workers and pensioners. Recent reforms have resulted in enhanced income protection for higher paid earners and greater predictability of future benefits for pensioners of all income levels. However, the heavy concentration of investments in Bahamas Government and other public sector securities, the failure of around 25 per cent of the work force to make regular NIB contributions, and very high administrative costs, are ongoing challenges faced by the Fund.”

The review predicted that “the Fund will be depleted between 2029 and 2034.”

It also said that the current National Insurance Fund is “not financially sustainable over the long-term with the current benefit provisions and contribution rate.”

It is obvious that to remain intact and grow there has to be less government interference and it has to be controlled by a board of businessmen and women of integrity, and not persons who are there to use the position as a stepping-stone to power. It cannot support a chairman who appears to want to live in ministerial state.

It needs a chairman of the standard of past chairman Patrick Ward, president and CEO of Bahamas First Insurance, who headed the Board with NIB Executive Director Algernon Cargill for the five years of the Ingraham administration.

Mr. Ward needed no expensive car, Blackberry, computer, iPhone, iPad, office decorated to ministerial standards to enhance his ego. He, and his team, managed the fund well in the interest of the Bahamian people.

This fund has to be protected from predators. If not, as the US visitor told The Tribune staff member, its failure will be the end of this country.