The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Prime Minister Perry Christie yesterday described the Bahamas’ economic performance as “more muted” than expected, as he delivered a much more downbeat assessment on the $3.5 billion Baha Mar project’s near-term prospects.

Mr Christie, in delivering the mid-year Budget in the House of Assembly, reiterated that it was “critical we generate significant increases in the rate of economic growth” if the Bahamas was to cut a 14.8 per cent unemployment rate to “an acceptable level”.

He added that both the Government and International Monetary Fund (IMF) agreed that the Bahamian economy expanded by barely 1 per cent last year, with Baha Mar’s delayed completion and opening among the factors holding back economic growth.

The 2015 growth rate represents a more than-50 per cent cut, in percentage terms, to the 2.3 per cent expansion that was projected for the Bahamian economy in last May’s 2015-2016 Budget.

Taking a more cautious approach, and not prematurely counting on a completed and open Baha Mar, Mr Christie said yesterday: “Looking ahead, both the Ministry of Finance and the IMF project an ongoing further strengthening of economic growth in the Bahamas over the next two years, abstracting from any developments in respect of the Baha Mar project.

“Real growth is forecast to rise to 1.5 per cent this year, and to just over 2 per cent in 2017. The completion and opening of Baha Mar will bolster growth even higher and to a significant extent.”

Mr Christie’s Baha Mar comments yesterday indicated that reality has set in, and that he now acknowledges that a ‘long work out’ is required before the $3.5 billion development can have any positive impact on the Bahamian economy.

The Prime Minister said the project was now embroiled in an “extremely complicated situation”, and conceded that a resolution is now outside his - and the Government’s - hands, with all power lying with the Chinese.

“Because of its enormous economic importance, the Government remains fully engaged with all the relevant parties in finding suitable arrangements in moving forward for the completion and re-opening of the stalled Baha Mar project as quickly as possible,” Mr Christie told the House of Assembly.

“Make no mistake about it: We are dealing with an extremely complicated situation.”

The Prime Minister’s political opponents were yesterday quick to jump on his change of language and tone relating to Baha Mar, given that Mr Christie pre-Christmas said “good news” regarding the project was imminent.

He subsequently suggested several times that a resolution was at hand, but Branville McCartney, the Democratic National Alliance’s leader, said yesterday: “The Prime Minister cannot say anything positive about Baha Mar right now.

“A few months back, he said that there will be good news imminently. He’s now saying nothing positive right now.”

The Prime Minister has likely been forced to change course by Tribune Business’s exclusive interview with Sir Sol Kerzner’s Baha Mar bid partner, Andrew Farkas, who said the project was unlikely to open until winter 2017 at earliest.

Mr Farkas also revealed that China Export-Import Bank, which has taken control of Baha Mar as security for its $2.45 billion loan, was refusing to properly engage with potential bidders - not providing any due diligence information, and only demanding that it be made ‘whole’.

Mr Christie yesterday said the Baha Mar impasse had been complicated by the numerous parties involved, including original developer, Sarkis Izmirlian; its financier, China Export-Import Bank; the contractor, China Construction America (CCA), and its Beijing parent; the project’s hotel brands; the Bahamian contractors and other creditors; the retail and restaurant concession holders; and the 2,500 Bahamian workers laid off last October.

He added, though, that “intensive discussions” were taking place between the China Export-Import Bank and CCA’s parent, China State Construction and Engineering Company (CSCEC), over plans for full construction remobilisation at Baha Mar.

“Amongst a myriad of other matters being addressed, the main focus of my Government with the relevant parties has been the re-mobilisation of the project and the securing of new investors and suitable operators within the shortest possible time,” Mr Christie said.

“Although some progress has been made, there are still some issues left to be resolved. In addition, the final agreement between China Export-Import Bank and CSCEC will have to go through internal procedures and obtain approval from regulatory authorities of both parties.

“Once the full remobilisation arrangement is approved, CSCEC will be responsible for working out the construction timetable and plan, and by then China Export-Import Bank will be able to update the Bahamian Government about the remobilisation timetable and construction plan.”

Given that both Chinese entities are state-owned, and have to-date shown themselves to be anything but fast-moving in relation to Baha Mar, any approval process in Beijing is unlikely to be swift.

“The process of securing major investors/operators is underway, and several substantial groups have already been introduced to the Government while the process gathers pace,” Mr Christie added of Baha Mar.