The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Democratic National Alliance's (DNA) leader yesterday said both major political parties were to blame for the threatened Moody's 'junk' downgrade, and called on the Government to better justify its $722 million borrowing needs.

Branville McCartney told Tribune Business that the Free National Movement (FNM) had failed to use its control of the Public Accounts Committee (PAC) while in Opposition to prevent the former Christie administration "running the country into the ground".

He argued that this - and the Government's repeated assertions that the 2017-2018 Budget was inherited from the PLP - showed that the Minnis administration "was ready to win an election but not to govern the country".

As a result, the DNA leader said both major parties should take some responsibility for the rating agency's decision to place the Bahamas' sovereign creditworthiness under a 'downgrade review'.

Speaking out as the 'blame game' between the FNM and PLP gathered pace, Mr McCartney emphasised that the Bahamas "cannot afford" a second 'junk' downgrade within the space of eight months.

The DNA leader added that the Minnis administration was also "culpable" for having to borrow $722 million, some $400 million of which is said to be needed to cover unfunded spending by the former Christie administration during the 2016-2017 fiscal year.

Mr McCartney said he had no problem with borrowing to pay bills, but argued that the Government needed to explain how taking on such additional debt would help "grow the economy" and benefit Bahamians.

Unexpected revelations regarding the Government's $722 million borrowing requirement, and five-fold increase in the anticipated 2016-2017 deficit to $500 million, were cited by Moody's as key factors in its decision to place the Bahamas' 'investment grade' credit rating under review.

"Put it this way. I think that if this downgrade occurs then we're looking at more hardship for the Bahamian - business persons and everyday citizens in this country," Mr McCartney told Tribune Business.

"The concern is that in the Budget outlined a couple of months ago, the Government basically said it was the PLP's Budget, which I was extremely shocked to hear."

The May 10 general election date gave the Minnis administration just three weeks in which to bring a Budget to the House of Assembly, and K P Turnquest, minister of finance, said several times that the 2017-2018 fiscal plan was largely inherited from its predecessor.

Mr McCartney, though, said this meant that while "the Bahamian people did not vote for a PLP Budget", they were largely going to receive another year of its fiscal policies.

"The Government had five years in Opposition in charge of the Public Accounts Committee, so for them to say they didn't have time to do certain things, and had to put a PLP Budget in, I find that it's a government prepared to win an election but not prepared to govern the country," the DNA leader told Tribune Business.

"That tells me a vote for the FNM was a vote for the PLP, at least for the first year."

Asked who was responsible for Moody's latest move, he replied that it was "a combination" and "both are to blame".

While the PLP is arguing that the Minnis administration brought the potential 'junk' downgrade upon itself with a 2017-2018 Budget that spooked both rating agencies and international investors, Mr McCartney said it could not be held solely responsible given its short time in office.

"We know the PLP ran this country up on brakes, into the ground," he added. "We also know that the FNM, when in Opposition, had the opportunity to be the watchdog for the Bahamian people by being in charge of the Public Accounts Committee, but ultimately they did nothing. We know the PLP did bad, foolishness, but the Opposition sat back and did nothing.

"They [the FNM] are a bit culpable in that regard. They are also culpable for borrowing $722 million. I understand there are bills to be paid, but they need to say how these monies will build the economy, not just borrow.

"That's where the FNM has gone completely wrong. They're not saying how they will get people back to work, not saying how they will get this economy to go, not saying how they will pay down the debt, and not saying how they will make doing business easier in this economy."

The Minister of Finance, in his Budget presentation, said $400 million was required to pay bills from the 2016-2017 fiscal year, with the balance set to cover the deficit forecast for the current period.

He said the Minnis administration had inherited a $160 million payments backlog, plus around $130 million in spending commitments for which no funding had been identified.

However, given the scale of the new government's borrowing, Mr McCartney urged it to show how it would generate returns for the Bahamian taxpayer in taking the national debt towards the $8 billion mark.

"They are doing the same thing the PLP did," he told Tribune Business of the new administration. "They're not saying how they're going to benefit the country. There's nothing wrong with borrowing, but there's nothing to indicate the investment returns to the country.

"There's no explanation. Borrowing that type of money in the first few days of your administration and not saying how you're going to build your economy, you'd expect these rating agencies to look and ask: 'What the hell's going on?

"If you are a company borrowing money, you want to make a return on that money, pay it back and make some kind of profit," Mr McCartney added.

"We've not heard two things: How are they going to pay this borrowing back, and how are they going to make some type of profit for the country."