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Bahamas must ‘plant seeds’ beyond Baha Mar growth impact

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank’s governor yesterday said the Bahamas needs to “plant seeds” for economic growth beyond Baha Mar to ensure it satisfies the credit rating agencies.

While expressing optimism that the Bahamas’ “can deliver” on its fiscal and economic reform package, John Rolle suggested the GDP growth benefits from Baha Mar’s opening have already been accounted for in Moody’s analysis.

As a result, he said this nation needed to focus on medium-term growth opportunities beyond the $4.2 billion project’s full opening - something the rating agency will likely be looking for when it revisits the Bahamas in 12-18 months’ time.

Mr Rolle said it was also essential that the Minnis administration “chaperone” Grand Bahama’s recovery, chiefly the Grand Lucayan resort’s re-opening, to a successful conclusion given the island’s importance to the overall economy.

Explaining that Baha Mar was “likely factored in” to rating agency analyses of the Bahamas’ growth prospects, he told Tribune Business: “Some of our challenges on the growth side will be on the medium term in terms of turning things around.

“We have pressures around how quickly we can bring Grand Bahama back, and the Government will have to chaperone that to process to a successful outcome. Beyond that, they will look to see what seeds we are planting to bear fruit in a few years time.”

Mr Rolle said some of these ‘seeds’ had already been much discussed, including the Government’s promised Fiscal Responsibility legislation and reform of the public sector’s financial management systems.

A former financial secretary, he added that there was likely to “be a lot of tension” involved in modernising the Government’s financial systems and processes even though this was essential for good governance.

“There is definitely going to be a lot of focus on the reforms,” Mr Rolle said. “I’m confident that we can deliver, but these things will always revolve around significant variables.

“Some of the issues you’re dealing with in the economy will be costly; doing certain things no matter when. Sometimes it’s better to just do it.”

Moody’s, in electing not to further downgrade the Bahamas to ‘junk’ status, effectively gave this nation a 12-18 month ‘breathing space’ to start delivering improved GDP growth prospects and executing on the Minnis administration’s fiscal consolidation plan.

Mr Rolle said the rating agency will likely concentrate on Baha Mar’s performance, and that of the wider hotel/tourism industry, when it next visits the Bahamas to assess whether the $4.2 billion project is likely to deliver increased visitor numbers as opposed to ‘cannibalising’ the market with Atlantis and existing properties.

“They will look, from the Government side, at how well they are doing on the fiscal matters they have signalled,” the Central Bank governor added. “I think that if the Government can deliver on its fiscal targets that will put them in a favourable situation with them [Moody’s].”

The Bahamas Chamber of Commerce and Employers Confederation (BCCEC), in its response to Moody’s, warned that potential investors are being “slowly demoralised” by the bureaucracy and uncertainty associated with the approvals process.

Moody’s said the Bahamian economy has contracted by an average -0.3 per cent per year between 2013 and 2017, prompting the Chamber to renew calls for the Minnis administration to make improving the ‘ease of doing business’ a “major priority”.

“In order for the economy to move in a positive direction, and to avoid any further downgrades, there must be deliberate and strategic investments made in the country,” it said. “There are a number of proposals before the Government waiting for approvals, but the decision process is too slow.

“Many of these proposals present an opportunity for the Government to remove itself from the administration and operations of various publicly-owned entities. These proposals, once approved, would provide significant financial benefits to the Government to include balance of payment improvements, and to the Bahamian and foreign investors by way of capital markets participation.

“The bureaucracy in conducting business is too involved, and the process is slowly demoralising potential investors in the country,” the Chamber added. “The ‘ease of doing business’ should be a major priority of this administration, as it will likely be a catalyst to increase investor confidence in helping grow the economy.”

The Chamber listed several ‘low hanging fruit’ measures that the Government could quickly implement, such as electronic interfaces that would allow all its departments to communicate with each other and the private sector - a development that would end businesses having to submit documents to multiple agencies.

It also pointed to Immigration reform, public-private parrtnerships (PPPs) and increased investment in small and medium-sized enterprises (SMEs) as measures that would get the Bahamian economy moving.

Chester Cooper, the Progressive Liberal Party’s (PLP) finance spokesman, also urged the Government to focus on “the nuts and bolts of growing this economy” as the best defense to a Moody’s downgrade.

“While it is a sigh of relief that the Bahamas has been able to ward off a downgrade to its sovereign credit rating, it is now more important than ever to remain vigilant regarding the economy,” he said in a statement issued last night.

“The negative outlook placed on the economy is not to be taken lightly, and carries important implications about the intense level of scrutiny with which the credit rating agencies are watching local developments.”

Mr Cooper reiterated: “The only way to put the country in a sustainable fiscal position is to grow the economy. Slashing expenditure alone just won’t cut it. In fact, without the right levers to spur growth it may have the unintended consequence of dampening Government revenues.

“To this end, the Government must articulate a plan for inspiring confidence in the economy, detailing areas of job creation; getting foreign direct investment out of the pipeline and pouring from the tap; and streamlining business processes so domestic entrepreneurship can thrive inclusive of launching its much-heralded incentives for driving small business development and growth.

“It has been more than 100 days since the new administration took office; it is time to get down to the nuts and bolts of growing this economy.”

Comments

Well_mudda_take_sic 7 years, 3 months ago

I walked through most of the Baha Mar development the other day; the entire place may as well be one humongous grave yard. They don't have enough cash coming in on a daily basis to pay for even one-fifth of their total electricity usage, much less all of the other operating costs they have with little or no cash revenue of any kind.

Maynergy 7 years, 3 months ago

           Maynergy
  "We Know Bahamas"

How to Harness the Power of Wind in the Bahamas in the question the government must answer right away for the people. Besides that electricity is too costly in the islands of the Bahamas compared to any country with 500,000 people or less. Wind Energy" redirects here. For the academic journal, see Wind Energy (journal).

Wind power stations in Xinjiang, China

Global growth of installed capacity[1] Part of a series about Sustainable energy Wind turbines near Vendsyssel, Denmark (2004) Energy conservation Cogeneration Efficient energy use Green building Heat pump Low-carbon power Microgeneration Passive solar building design Renewable energy Anaerobic digestion Biofuel Geothermal Hydroelectricity Solar Tidal Wave Wind Sustainable transport Carbon-neutral fuel Electric vehicle Fossil fuel phase-out Green vehicle Plug-in hybrid Sustainable development.svg Sustainable development portal Wind-turbine-icon.svg Renewable energy portal Aegopodium podagraria1 ies.jpg Environment portal v t e Wind power is the use of air flow through wind turbines to mechanically power generators for electric power. Wind power, as an alternative to burning fossil fuels, is plentiful, renewable, widely distributed, clean, produces no greenhouse gas emissions during operation, consumes no water, and uses little land.[2] The net effects on the environment are far less problematic than those of nonrenewable power sources.

Wind farms consist of many individual wind turbines which are connected to the electric power transmission network. Onshore wind is an inexpensive source of electric power, competitive with or in many places cheaper than coal or gas plants.[3][4][5] Offshore wind is steadier and stronger than on land, and offshore farms have less visual impact, but construction and maintenance costs are considerably higher. Small onshore wind farms can feed some energy into the grid or provide electric power to isolated off-grid locations.[6]

Wind the Power of Wind in the Bahamas islands From Wikipedia, the free encyclopedia

Wind power gives variable power which is very consistent from year to year but which has significant variation over shorter time scales. It is therefore used in conjunction with other electric power sources to give a reliable supply. As the proportion of wind power in a region increases, a need to upgrade the grid, and a lowered ability to supplant conventional production can occur.[7][8] Power management techniques such as having excess capacity, geographically distributed turbines, dispatchable backing sources, sufficient hydroelectric power, exporting and importing power to neighboring areas, or reducing demand when wind production is low, can in many cases overcome these problems.[9][10] In addition, weather forecasting permits the electric power network to be readied for the predictable variations in production that occur.

Maynergy 7 years, 3 months ago

               Maynergy
      " We know Bahamas."

Super-Colossal Wind Turbines May Be on the Horizon If wind power is going to displace inexpensive fossil fuels, wind turbines need to get bigger — much bigger Come on Bahamas government give the people a break so they may save money.

Set up in the next House sitting: "The Bahamas Sovereign Funds" to benefit the next fifty years of Bahamian children and people.

Sovereign wealth fund From Wikipedia, the free encyclopedia

A sovereign wealth fund (SWF) is a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as private equity fund or hedge funds. Sovereign wealth funds invest globally. Most SWFs are funded by revenues from commodity exports or from foreign-exchange reserves held by the central bank. By historic convention, the United States' Social Security Trust Fund, with $2.8 trillion of assets in 2014, is not considered a sovereign wealth fund.

Some sovereign wealth funds may be held by a central bank, which accumulates the funds in the course of its management of a nation's banking system; this type of fund is usually of major economic and fiscal importance. Other sovereign wealth funds are simply the state savings that are invested by various entities for the purposes of investment return, and that may not have a significant role in fiscal management.

Maynergy 7 years, 3 months ago

          Maynergy
    "We know Bahamas"

Behind Grey Curtains by P. Carl Gibson

Excerpts : Examples are numerous:

Public transportation spending could open steady growth as a “fixed asset” in a balance sheet” moving forward. “Fixed Assets” turnover, infra-structure and prosperity may echo fabulous growth for the country well into the century. Thereby through defined economic expansion throughout the islands likely, these and any targeted investments could cushion the economy from downward recessionary trends looming and the tourism dependence path. While being mindful this may also help set in place long term growth and also provides a revenue stream that could generate funds for needed social services continuum.

A country, town, or city is only as good as it transit system. That’s really why continued vital investments in new technology, equipment and infrastructure are encouraged for the future to be bright and profoundly gainful.

Also the building of seaports, power plants, sewer plants, highways, roads, tunnel construction and other capital infrastructure projects are most favorable to sustain valiant gross domestic product (gdp) growth throughout the island nation chain with impressive national potential.

http://tribune242.com/users/photos/2017…

Maynergy 7 years, 3 months ago

                 Maynergy
      "We Know Bahamas"

A country, town, or city is only as good as it transit system. That’s really why continued vital investments in new technology, equipment and infrastructure are encouraged for the future to be bright and profoundly gainful. Also the building of seaports, power plants, sewer plants, highways, roads, tunnel construction and other capital infrastructure projects are most favorable to sustain valiant gross domestic product (gdp) growth throughout the island nation chain with impressive national potential.

http://tribune242.com/users/photos/2017…

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