PM: We must prove S&P wrong on downgrade

Prime Minister Perry Christie.

As of Thursday, December 22, 2016

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By AVA TURNQUEST

Tribune Chief Reporter

aturnquest@tribunemedia.net

IN the wake of a downgrade by international credit rating agency Standard & Poor’s to “junk” status, Prime Minister Perry Christie said it is up to his administration to prove them “wrong” as he lamented the fact that S&P did not fully appreciate the “weight” of Baha Mar’s impending opening.

His comments came as opposition forces yesterday railed against the government over the country’s downgrade, placing the blame squarely on the ineptitude of the Christie-led administration this term.

However, Bahamas Chamber of Commerce and Employers Confederation Chairman Gowon Bowe yesterday countered that partisan criticism could not be given legitimacy unless accompanied by a tested, economically viable alternate plan.

Speaking to government owned broadcaster ZNS yesterday, Mr Christie said: “They’re saying that there will be, by 2018, positive indicators, but that they have doubts as to whether what has been promised by Baha Mar and the government, that it would take place in the time in which we say it is going to take place.

“Our job is to prove Standard & Poor’s wrong and verify why Moody’s retained the investment grade for the Bahamas.”

He added: “(There was an) upgrade on the outlook from negative to stable and that means therefore we are disagreeing on the time it’s going to take to bring about the results that they say should be in place here.”

According to the nation’s leader, S&P “failed to properly take into account the weight of Baha Mar.”

He added: “And we felt that if they had spoken to the new owners they would have had a different view as to what is going to take place there. For example, they and I see some elements of the opposition, doubt that there would be 1,000 to 1,500 jobs in January - the government has no doubt about that fact at all.”

Meanwhile, when asked to weigh in on the matter, Mr Bowe said this downgrade has been in the making for a long time.

“Since independence,” Mr Bowe said, “there is no one government that can take the credit, or duck the credit, for this downgrading. There has been no fiscal surplus (historically) so in reality this here is a culmination of years, decades, of deficit spending and borrowing.

“I don’t think we’ve ever met the budget, but has any government said what we came up short or long on as far as expenses go? We have the information but there has never been an analysis, any real critique, over what has taken place.

“The rating agencies are not saying which political party did what, they are looking at the Bahamas. Casting blame is an exercise in futility, all of them have a blame to share and a role to share in this downgrade.”

Mr Bowe continued: “Will it have any impact on Christmas festivities? No. Was it ideal to have the news break now? No. But this is when the National Development Plan should be heightened, if we are serious about really changing the course.”

Global credit rating agency S&P has justified the downgrade to BB+ (speculative or “junk” grade) from BBB- (investment grade) on the basis that it is now projecting the Bahamian economy will only grow by 0.3 per cent this year, down from its 1.2 per cent estimate in April.

Echoing the International Monetary Fund’s (IMF) recent warnings, S&P said government spending was still outpacing revenue despite the introduction of value added tax (VAT), with Hurricane Matthew restoration costs set to inflict “further pressure” on expenditure in 2017.

Lower gross domestic product (GDP)/economic growth would also negatively impact the government’s tax revenues and fiscal consolidation plans, the agency said.

At a swearing-in ceremony for her new slate of senators on Tuesday, Official Opposition Leader Loretta Butler-Turner forecast that the country was headed into the “bleakest Christmas” it had ever seen.

“We’ve just been downgraded by S&P, just last week the IMF predicted that the reckless spending of this government is out of hand, there is no accountability, no transparency, and now we have literally been downgraded to non-investment grade status.”

She continued: “What we plan to do, as this grouping, is stay focused to not get caught up in all of the side discussions as to who has different personal views. We are going to come to the Bahamian people as early as possible and demonstrate that it is our combined effort to get rid of this incompetent, inept, and untrustworthy PLP government, and that is what drives us to overlook our differences and to work past them.”

For his part, Free National Movement (FNM) Leader Dr Hubert Minnis posited that the downgrade was a “disastrous consequence of nearly five years of an inept PLP government and their policies.”

Dr Minnis hit out at the government’s “continued failure” to reduce unemployment and curtail spending, and promised that his party would provide “real economic leadership.”

“The embattled prime minister will have all of us believe that they have in fact acted,” Dr Minnis said, “but as we can see by the downgrade to junk status – Christie’s words are just as worthless as our sagging credit. The credit rating agencies have continued to ask the government to cut expenditures but typical of this PLP government they refused to heed any practical economic advice.

“They forced through a 7.5 per cent VAT saying it would be put towards debt reduction. More empty rhetoric and broken promises. The results? The debt continues to rise, they have never been held to account for where the VAT money went, yet they continue to spend millions of the taxpayer dollars on ill conceived and mismanaged programmes that fail to deliver significant economic impact.

“And as our economy spirals downward they hand out contracts to their allies like the wasteful Christmas decorations in Nassau that cost taxpayers (nearly) $350,000,” Dr Minnis added.

Meanwhile, calling for mature dialogue on the concerns highlighted by S&P, Mr Bowe also made the point that the global agency was just one of three leading institutions. He noted that another leading agency, Moody’s, did not make a similar downgrade, and that it demonstrated the subjectivity of agencies undertaking rating evaluations.

In considering the disappointment expressed by the governing side over the downgrade, Mr Bowe underscored the need for a cultural shift from reliance on anecdotal stories to empirical data.

He urged Bahamian experts in the financial services sector and related fields to lend their skills to public service.

Mr Bowe said: “The international agencies have grown tired of the rhetoric, we’ve been doing it all on anecdotal stories, they want to see empirical change and that is a culture change. Telling them that your plan is to grow the economy, decrease spending, which party hasn’t said that internationally?”

“All of that is lip service,” he said.

“The current government should not be touting plans but demonstrating it empirically, present plans with analysis.”

More like this story

viewersmatters 7 years, 10 months ago

Four downgrades within a single term in office and now the PM just realizing that it's not a game and this is real life and this is very serious, instead of spending almost a billion dollars of tax payers money the focused should had been more on developing this nation to a better status standing. Guess he probably thought everyone love kick backs and maybe his government could had given this agency a couple million of thee payers money to this agency to play a blinds eye at the Bahamas, maybe instead of giving over 30000 of tax payers money to allow little kids to use downtown and fish fry as a coloring practice book that money could had went to decrease the national debth. This is the real world and real life where things are serious and not taking for granted.

TalRussell 7 years, 10 months ago

Comrade Rt. Honourable Prime Minister, when you say that the wake of a downgrade by international credit rating agency Standard & Poor’s to “junk” status, that S&P did not "fully" appreciate the “weight” of Baha Mar’s impending opening,"... Can I ask how would it have been possible for you to have furnished Standard & Poor's, with the proof that Baha Mar has in fact been sold yo Chow Tai Fook Enterprises, when all along you maintained that the only reason you are unable to share the details of the sale with the public, is because the documents remain under court order seal... Or did you just expect them take your word that all is and will continue be fine at Baha Mar?
PM, you're not suggesting that you showed the "sealed" documents to Standard & Poor's... and, if not, how was Standard & Poor's to evaluate what you were telling them?

Sickened 7 years, 10 months ago

Excellent point Tal. Perry (the fool) wants everyone to trust him on this. How long have we heard about BahaMar 'opening soon'?

goodbyebahamas 7 years, 10 months ago

Very good point Comrade Russia, I'm starting to hate you less and less....LOL...only F-ing with you Comrade Russia.....lol.

ThisIsOurs 7 years, 10 months ago

"According to the nation’s leader, S&P “failed to properly take into account the weight of Baha Mar.”"

But after the last downgrade, wasn't their propaganda line that Bahamar wasn't a big deal? That there was tons of other stuff was going on and that Moody's and S&P OVERESTIMATED the impact of the stalled Bahamar opening?

These people need to stop lying to the public. Tell them the seriousness of the situation we're in. Investors are not stupid, they know what junk status means

Economist 7 years, 10 months ago

It is very difficult to borrow if you are not rated by one or more of the three Rating Agencies.

It is not for them to understand you but for you to understand them.

They do this for well over one hundred countries so they know what they are looking for. It is The Bahamas Government's duty to see that the rating of the Country is as high as possible in order to keep the cost of borrowing down.

This government has totally ignored the warnings. They have deliberately driven the country into the ground for their own personal reasons (including giving jobs to get re-elected by keeping dead weight corporations like Bahamasair $550 Million down the drain).

The only ones who failed to properly take in to account anything, was the government.

RUKiddingMe 7 years, 10 months ago

You have had years to "prove them wrong" and all you have managed to achieve is confirming their decision - over and over and over!! Carry yass every last one of you crooks!

TalRussell 7 years, 10 months ago

Comrade Economist, my sisters, brothers and I were raised by our islander born and raised parents and grandparents who taught us that we must first prove our value to others... before asking for anything.
We were taught to be honest, loving, kind and gentle to others, cool tempered and not to be afraid or too proud to admit to our mistakes or reach out for help. To be respectful and sensitive to all others.
Neither a Lender Nor a Borrower Be!

B_I_D___ 7 years, 10 months ago

...and guess what Mr. PM...it won't be YOU proving them wrong...

TalRussell 7 years, 10 months ago

Comrades! Some of us subscribe to a Bahamaland that can become a debt free nation.
I think we as a nation owe others some $8 BILLION dollars... and the borrowing costs, not only on government loans will go up but you will see your mortgage and consumer costs of loans, credit cards borrowing charges climb upwards under "Junk Country Status. Becoming harder to get business loans could hit 29% plus loan rates.
If you think 12,000 residences is alarming enough who have had their lights disconnected for not paying their electricity bills....the numbers of the lights discounted for not paying their light bills could grow to 24,000 to 30,000.

concernedcitizen 7 years, 10 months ago

Please PM ,, you now are talking only for your most gullible supporters .S&P can see the 2 billion on the debt in four years ,the 800 million from VAT that is no where to be found ,the 1/4 billion dollars that walked out the front door of BOB , the 30 to 100 million for about 10 million worth of buildings in the bush in Andros ..

SP 7 years, 10 months ago

Forgot The $25+ Million For The 5 Year Ongoing Tiny Building On JFK

Baha Mar constructed a 3000 room casino hotel in shorter time!

ohdrap4 7 years, 10 months ago

i have yet to see a candidate run on fiscal responsibility, austerity measures and sacrfifice for recovery/

where is this candidate?

why is branetta not talking about that.

banker 7 years, 10 months ago

I would like to correct Gowon Bowe. There actually has been exactly one small fiscal surplus and balanced budget delivered in the Bahamas, and it was done by Sir William Allen when he was Finance Minister.

SP 7 years, 10 months ago

.......................... PM Perry Gladstone Christie, Jackass Extraordinaire ...........................

This flaming jackass has always been a fast talking, bullshitting IDIOT! He can't talk his way out of this one.

Even die hard PLP's are not stupid enough to listen to him anymore.

DEDDIE 7 years, 10 months ago

The solution to the problem.

25 % reduction in the public service - 350,000,000 annually. Sell remaining shares in BTC - $300,000,000 (premium for the government not been involve). Sell BEC - $500,000,000(The reason why BEC is not profitable is because they are not allowed to operate like a real business). Freedom of Information Act $200,000,000 ( Openness has a financial impact). Provide the Chinese with a 100 year lease in part of Andros mirroring the one the Chinese gave to to the British in the form of Hong Kong. Permanent residence or even citizenship for those with doctorates, engineering, Ivy League graduates etc(offset the brain drain).

There is quite a bit more ideas I can suggest but those would suffice for now.

GrassRoot 7 years, 10 months ago

well 25% reduction in public service results in a felt reduction of public service of maybe 5%, so we can live with that.

ThisIsOurs 7 years, 10 months ago

this makes the whole financial team look extremely bad, Halkitis, Simon Wilson, Balton Bethel..(John Rolle just come but...unfortunately the stink gonna get on him too if he's not careful.) they oversaw this ship for four years and they approved all the croniferous payments. Why would any sensible person continue to listen to any of their financial advice?

sheeprunner12 7 years, 10 months ago

If we had an autonomous Financial Secretary we would have fiscal prudence ........ the whole system revolves around greedy, crooked politicians with NO vision except to win the next election ........... that is our problem

ThisIsOurs 7 years, 10 months ago

"Mr Bowe also made the point that the global agency was just one of three leading institutions. He noted that another leading agency, Moody’s, did not make a similar downgrade, and that it demonstrated the subjectivity of agencies undertaking rating evaluations."

He's probably right, it is subjective, but he and the government missed the point. Somebody called it. It doesn't matter so much that everyone didn't, somebody did. Increasingly disappointed in Gowen Bowe's apologies for poor government performance

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