The Tribune

FINANCIALLY, The Bahamas is in trouble, unless it increases investments or drastically cuts back on spending – or can achieve a combination of both.

According to a report done by Tribune Business Editor Neil Hartnell yesterday, the Royal Bank of Canada warned that The Bahamas’ debt-to-GDP ratio continues to increase beyond the so-called 70 per cent “danger threshold”, with business leaders agreeing that international concerns are valid.

RBC, in a January 2016 report, pegs The Bahamas’ debt-to-GDP ratio at 76.5 per cent at the end of September 2015, having grown by 8.5 percentage points or over $500 million year-over-year.

The Central Bank’s figures agreed with that assessment, stating that the Bahamas’ debt-to-GDP ratio was 73.4 per cent at the end of 2014 – already by 2014 several points over the danger threshold.

In its January 2016 report on the Caribbean economies, the Royal Bank said that based on Central Bank of The Bahamas’ data, “total public sector debt expanded by 8.5 per cent year-over-year – from $6 billion in the 2014 third quarter to $6.51 billion in the 2015 third quarter – which equates to roughly 76.5 per cent of the IMF’s 2014 GDP data”.

It reported that Value Added tax had slowed the slide, but not enough to reduce grave concern for the country’s financial future.

The ratio, said the report, also remains stubbornly above the 70 per cent “danger threshold” identified by the International Monetary Fund (IMF).

As countries go increasingly beyond that ratio, as The Bahamas now appears to be doing, ever-increasing interests service costs threaten to suck them into a deepening “debt spiral”, where they are forced to borrow to meet existing obligations, Mr Hartnell reported.

The government was warned that the economy — now adjusting to VAT — cannot take another shock to cover the controversial National Health Insurance scheme, the cost of which is still unknown, but which government is determined to introduce sometime this year.

The Bahamas certainly needs growth, but it should start immediately on cut backs. It can start with controlling wastage in the various government departments, and the still unexplained missing pharmaceutical supplies from the Princess Margaret Hospital — attributed to an auditor’s error in not picking up mistakes in data entries.

And, according to Foreign Affairs and Immigration Minister Fred Mitchell – who took exception to our editorial suggesting that he should be removed as Immigration Minister because of the way he appears to have handled the case of two Cubans – we have taken “a perverse and anti-Bahamian view of the facts”. The Cubans were released from prison when a judge discovered that they had been illegally held for the past three years. Mr Mitchell had maintained that one of them, because of his military training, was a “security risks”. And because of the criminal record of both of them they were not welcome in either Cuba, their country of origin, or in the United States. Suddenly we learn that on their release, not only have they left The Bahamas through fear, but they are now back with their families in the United States. Despite Mr Mitchell’s statement, they are not only in the US, but both have jobs, one in construction and the other on a golf course. If Mr Mitchell, as he told the House, had tried to get the United States to take them back, but had been refused, then he should be able to produce documentation as proof of what he has been saying. In his reply to our editorial, he has sent a response through Bahamas Information Services that he did not mislead the House, or the country. If this is so, then he should be most anxious to produce the evidence to back up his statements — surely after all his questioning of the court’s decision to release the men, then putting out an alert for them to be hunted down and returned to prison, he does not expect anyone to accept his word. All around — if the comments that are filtering into our office are to be any judge — Bahamians are demanding proof.

According to Mr Mitchell’s interpretation in all of this is his reply to us that “the only twisted interpretation is in the mind of Eileen Carron — as twisted as a corkscrew”.

We thank him for that complement. And now we shall take that “corkscrew” and invite Mr Mitchell to turn his attention to The Bahamas’ urgent need of cost cutting and consider what contribution he can now make to reducing the country’s debt.

He must remember his grandiose statement published in The Tribune on June 6, 2013. On that occasion, our knight in shining armour, who was out to save his beloved country, announced that he would spend a substantial amount of time in the Middle East and Asia hunting own new funding sources for our “capital-starved” country.

He said his ministry had been given a mandate to find new capital for the country as traditional sources were winding down on lending.

“The Prime Minister,” he said, “did not commit this country to any specific borrowing but if there is to be development and there is cheap money available why not? Particularly when our traditional friends are telling us that they are not supporting lending us money anymore.”

He said that to find and “search for such sources of funding for this country new sources of investment, it is critical that we do so as the traditional markets and sources appear to be challenged.

“This does not mean abandoning our traditional friend, but at a time when our country is capital starved and there is excess capital in areas of the world outside our normal sphere of influence it would be foolhardy not for us to search,” he said.

That was three years ago, and Mr Mitchell is still globe-trotting. When is he going to stop long enough give an accounting of his success?

After all, he must remember that he is travelling on taxpayers’ money and it is the custom that after each trip there should he an accounting of how much has been spent, and what investment has been brought in. Either these trips should bear fruit, or they should be stopped in the name of cost cutting. We suppose with his superior attitude he would consider such accounting to his employers — the Bahamian people — beneath him.

We hope we are not misjudging Mr Mitchell, but the only thing that our “corkscrew” mind could find was the jubilation over his presentation to the Ministry of Agriculture of $500,000 worth of fertiliser from Morocco, which was available for Bahamians to purchase at “a very reasonable price”. According to Mr Mitchell, this donation was to reflect the “strong relationship” between The Bahamas and Morocco. The Tribune gave his presentation quite a large spread on April 1, 2014 — April Fool’s day.

However, this is no April Fool’s joke. Financially, The Bahamas has gone over the danger zone. It’s now the time for reckoning. It is time for Mr Mitchell to justify his trips. For example, what else has he brought home to reduce our national debt?