The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The FNM’s deputy leader has questioned why the Bahamian people have no equity stake in Baha Mar if the development has been given $1 billion worth of investment incentives.

K P Turnquest, picking up on comments by minister of state for legal affairs, Damien Gomez, questioned “how much more” the Government would effectively invest in the Cable Beach redevelopment without having more direct involvement.

Mr Gomez, in successfully persuading the Supreme Court not to recognise (for the moment) Baha Mar’s Chapter 11 bankruptcy protection filing in Delaware, last week revealed that the Government had granted the developer some $1 billion in investment incentives.

That figure was not broken down, but Mr Turnquest told Tribune Business: “The statement was made that we’ve given $1 billion in concessions. How much more are we going to invest in this project without an equity stake?”

His remarks reflect the deepening sense of unease over Baha Mar’s fate, especially since the Bahamian people have yet to enjoy any real benefits from the numerous tax breaks and land transfers granted to the developer.

And Mr Turnquest’s sentiments also feed into the never-ending debate about how much the Bahamas concedes to attract foreign direct investment (FDI), with this nation all too-often trading land and tax breaks for jobs and entrepreneurial opportunities.

Meanwhile, the FNM deputy leader said Baha Mar’s Chapter 11 demise again showed the Bahamas should not place its economic revival hopes “in one basket” – especially one that was state-owned.

“We keep doing it, and as I said before, putting our eggs in a state-owned basket,” said Mr Turnquest, referring to the fact that Baha Mar’s Chinese partners, the China Export-Import Bank and China Construction America, are both owned by the Beijing government.

“We have to look at where we’re trying to go as a country, and make sure the strategy fits the policy and the policy fits the strategy. I think it is imperative that we get this thing [Baha Mar] resolved in the quickest and efficient timeframe possible. Whatever that entails, we certainly need an expeditious result in this matter.”

Mr Turnquest also described as “a serious concern, a serious issue” the warning from Standard & Poor’s (S&P) that there was “at least” a 50 per cent chance it would further cut the Bahamas’ sovereign credit rating within the next 90 days as a result of the Baha Mar impasse.

“We all know what that means in terms of our ability to borrow and cost of borrowing,” Mr Turnquest told Tribune Business. “It’s a very serious concern for us, certainly our ability to borrow as well as the rate we will be subjected to.

“This Budget envisions borrowing $182 million, so it means if we’re going out for new borrowing, what effect will any downgrade have on that? It’s something we have to consider very seriously.”

He added: “All of the ratings were based on the expected returns from Baha Mar. In as much that was the case, I am very concerned this will result in another downgrade.

“It’s not so much that Baha Mar is the situation, but what are the downstream effects of something of this nature. They can be very significant.”

Hubert Chipman, Mr Turnquest’s FNM and parliamentary colleague, would not be drawn on how likely he thought an S&P downgrade was.

But, with the rating agency having already shaved the Bahamas’ projected economic growth from 2.5 per cent to 1.7 per cent for 2015, the St. Ann’s MP expressed concern about the impact Baha Mar’s delayed opening will have on the Government’s revenue and deficit projections.

“You might hear the story that Baha Mar is not factored into the numbers for this year,” Mr Chipman said, “but I don’t believe that for a minute.”