The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The Ministry of Finance will meet with the Central Bank this week to discuss whether the Bahamas Mortgage Corporation (BMC) can issue more bonds, with between 2,000-3,000 qualified applicants still on the waiting list for low-cost government homes.

Kenred Dorsett, minister of housing and the environment, said yesterday: “The  Ministry of Finance will be meeting with the Central Bank this week to discuss the ability of the Mortgage Corporation to issue more bonds.

“If that happens, certainly we will be constructing more homes. Right now, we are completing homes in the John Claridge Subdivision and the Ardastra Gardens Subdivision. The Bahamia development in Grand Bahamas has reached a point where people should be getting their keys in short order.

“Now that we are completing all of the hurricane relief efforts in San Salvador, we will recommence construction in San Salvador for the homes there, and in Abaco they are completing the homes that we have coming out of the ground.”

Mr Dorsett added: “Nassau is where we have most of our demand, and we will need additional funding from the Mortgage Corporation to be able to expand.”

He said there was still a significant list of applicants for the Government’s housing programme.

“We still have a significant list, but we know that for the persons who qualify for homes in the range of $90,000 and up, I’m still seeing numbers in the range of 2,000-3,000 on my list,” said Mr Dorsett.

Plans for the Bahamas Mortgage Corporation to raise more bond (debt) financing are likely to be viewed with considerable concern in some quarters, given the financial challenges already plaguing the institution.

Besides a near-40 per cent delinquency rate among existing borrowers, which continues to hamper the Corporation’s cash flow, its external auditors refused to give an ‘opinion’ on its most recent accounts.

Beneby & Company blamed this on a “breakdown” in internal controls that had resulted in the production of “unreliable financial reports”.

The BMC’s ‘bond sinking fund’, intended to finance the repayment of principal when its debt financing matures, held just over $64 million at end-June 2013.

While a seemingly significant sum, it covers just 37.7 per cent of the $170.168 million worth of bond principal that remains outstanding and owing.

And with the Government seemingly keen on giving its housing programme a major boost, and address a 2,000-3,000-strong waiting list, there is the potential for this deficit (financing gap) to widen.

Should the Mortgage Corporation’s ‘bond sinking fund’ fail to generate enough cash reserves to repay these debt issues when the principal falls due for repayment, the burden of covering the deficit will again likely fall on the already hard-pressed Bahamian taxpayer.