The Tribune

By KHRISNA VIRGIL

Tribune Staff Reporter

kvirgil@tribunemedia.net

FREE National Movement Deputy Leader Peter Turnquest yesterday asserted that Prime Minister Perry Christie was “on very thin ice” regarding his economic forecast coupled with his outlook of the country’s continued ability to borrow at reasonable rates.

This came a day after Mr Christie criticised Standard & Poor for its “downbeat” assessment of the Bahamas’ economy while insisting that his administration had a clear vision of the policy framework needed to redress public finances. Mr Christie said this made him confident that the country was on the brink of economic growth.

On Wednesday Mr Christie, who is also minister of finance, questioned the recent downgrade from S&P, suggesting he has concerns about the agency’s credibility.

At the time, the nation’s leader again expressed his government’s commitment to a timely resolution of the Baha Mar dispute and the resort’s completion in a manner that works in the best interest of the country.

Last week, S&P downgraded the Bahamas’ credit rating due to the “economic shock” from Baha Mar’s bankruptcy filing.

Mr Turnquest said: “If the prime minister feels that the delayed opening of Baha Mar will not have a short to medium term effect on our GDP, he is certainly out on that limb by himself. Three and a half billion dollars invested with no immediate return will have an effect if only in the carrying cost. The fact that capital is tied up and unproductive carries a cost.

“Longer term, the requirements to start up the promotion and recovery programme will take time. He seems to ignore these realities and the impact they will have on profitability.”

The East Grand Bahama MP said while Mr Christie can praise his administration’s revenue-raising measures through value added tax (VAT) implementation, he was of the view that the government was missing the other side of the equation.

“As they bolster social and capital spending to offset the negative effect of VAT, the long-term effect will likely result in weaker growth in the so-called real economy.

“So yes, he can take comfort in Moody’s decision to hold its ratings steady however that does not mask the continued structural weaknesses in our economy.”

On Monday, Moody’s maintained its existing rating and outlook on this country’s creditworthiness.

However, last week S&P took the opposite direction when it downgraded The Bahamas with a forecast of depressed growth due to the Baha Mar deadlock and long term structural weaknesses. S&P put this country’s sovereign rating at “BBB-/A-3” from “BBB+/A-2”, just one notch above so-called “junk status.”

On Wednesday in the House of Assembly Mr Christie said: “Mr Speaker, let there be no doubt either in this honourable House or among the Bahamian public, that the government is firmly committed to a timely resolution of the Baha Mar matter and the completion of the project, in a manner that will serve in the best interest in our country,” he told the House of Assembly.

“Despite that, S&P takes a dim view of prospects for the project and suggests that as a result, real GDP per capita in the Bahamas will barely grow at all over the next several years.

“Mr Speaker, such a downbeat assessment simply does not match up to reality. And in fact, it also flies in the face of some of the evidence that S&P itself presents in its report.”

Mr Christie said to that end, the government has been pursuing a detailed and transparent medium-term fiscal consolidation plan designed to gradually reduce and eliminate the deficit and return the debt-to-GDP ratio to lower than more desirable levels.

Mr Christie went on to call S&P’s assessment “unfortunate” saying that it failed to fully and properly account for the government’s proactive and dynamic growth agenda in its analysis.