The Tribune

ON FRIDAY in its Investors Services newsletter, Moody’s announced that the Bahamas’ Baa2 rating was now on review for a downgrade.

“The decision to place the ratings on review,” said the newsletter, “was prompted by the continuing rise in risks to the country’s medium-term economic prospects and to its fiscal strength, notwithstanding the government’s ongoing fiscal consolidation programme. The review will allow Moody’s to assess the likelihood that economic growth prospects will improve, debt metrics will stabilise and government policy will effectively address its macroeconomic and fiscal challenges.”

However, it continued, the “ review action indicates that the rating is likely to move down, and the change could be by one notch or more. Moody’s expects to complete the review within two months…

“The worsened economic performance,” said Moody’s, “is characterized by persistently high levels of unemployment, stagnant credit to the private sector and declining investment, in part explained by the indefinite opening of the Baha Mar mega resort. Additionally, structural constraints related to the energy sector and labour market negatively impact costs for the tourism sector, which accounts both directly and indirectly for about 50 per cent of GDP. Given that these conditions are likely to persist in 2016 and 2017, Moody’s considers that it is unlikely that The Bahamas will return to its potential growth rate of about 1.5 per cent in the short-term.”

Moody’s also noted that “although the government has been able to reduce its fiscal deficit by introducing a value-added tax in January 2015, debt accumulation has persisted, weakening The Bahamas’ fiscal strength relative to Baa-rated peers. At low (-), The Bahamas’ fiscal strength is the lowest in the Baa rating category.”

The greatest crippling factor to our economy has been government’s interference in and bungling of the indefinite — if not permanent – closure of Baha Mar, thus destroying jobs and investment opportunities for many Bahamians.

Prime Minister Christie — despite the doubts of Bahamians— has insisted that what he is doing is in the best interest of this small country. Obviously, moving in lock-step with the Chinese, and against the developer who he had initially encouraged to make the Cable Beach investment, he felt he was on solid ground. He did not anticipate the quicksand into which the Chinese were leading him. After all didn’t China – we say China, because it is Beijing dealing the cards, not an individual Chinese investor– that “assured” our government that it would finance and complete the $3.5 billion Baha Mar project if its Chapter 11 bankruptcy protection was removed. That was a year ago, with no agreement in sight — except, of course, the frequent assurances of our prime minister that all will be well in the end.

The latest from Mr Christie came on June 28 when he said his government will be invited at some point to begin consideration of what it has to do to facilitate construction permits and “whatever else” China Construction America (CCA) needs in place to complete the unopened $3.5bn Baha Mar resort.

Meanwhile, Baha Mar loses value daily while China continues to negotiate.

After all, it was China that made the commitment to finance and complete Baha Mar as soon as Chapter 11 bankruptcy protection was removed. Does Mr Christie and Beijing need to be reminded that Chapter 11 was officially removed on September 15, 2015 with the signature of Judge Kevin Carey of the US Bankruptcy Court?

So what’s the hold up? Although Mr Christie has denied it, the rumour persists that China wants many concessions. Bahamians would be justified in asking what these concessions are to reward – destroying our economy? Among those concessions — which Mr Christie has denied – China would like the Bahamas to grant economic citizenship in the Bahamas for 500 Chinese nationals. This is more than this government would dare do, especially after so many Bahamians who are entitled were denied citizenship by government’s recently bungled referendum. After all of this high handed behaviour by Beijing, many Bahamians would consider even one economic citizen one too many. So our advice to this government is stop before you begin.

Also questions should be asked of Deputy Prime Minister “Brave” Davis — if in fact he too claims to be on the side of the Bahamas — as to why he went to Panama to participate in the ribbon-cutting exercise to open CAC’s headquarters in Panama City. It was claimed that the ceremony was “to mark a new milestone in the company’s 30-year history of offering superior construction and real estate services in the Americas.”

According to the report from Panama Mr Davis was there not only to be among those who cut the ribbon for this expansion, but to acknowledge “CCA’s contribution to the Bahamian economy and commend CCA for its resourcefulness”.

How could he in all honesty have gone to Panama knowing what he had left behind in The Bahamas, but having gone made such statements when Baha Mar was closed and the whole controversy, which no one wanted exposed by a Chapter 11 court case in Delaware, was over CCA’s standard of workmanship and its failure to complete construction on time and on budget.

Recently, government hired a UK legal team to write a report to justify its handling of the Baha Mar tragedy. Among other things the report concluded that Mr Izmirlian had no realistic prospect for raising the $600m needed to complete and open Baha Mar. However, the team failed to acknowledge that two months ago Mr Christie had commented that Mr Izmirlian “comes from a family that isn’t short on money”. This suggests that he has the resources to complete.

Nor did they discover from Mr Izmirlian that the reason he was reluctant to invest his money was because he wanted CCA removed, and was unhappy about the terms and conditions the Chinese were seeking to impose on him to retain CCA to commplete the project.