The Tribune

By ALFRED SEARS, QC

I CAUTION the Minnis government that “official statements” of ministers, unlike statements of candidates during the general election campaign, can have negative legal consequences, talk down the economy and undermine the national interests of The Bahamas.

Moody’s announced, on June 6, 2017, that “official statements” that The Bahamas’ position was weaker than previously estimated and debt ratios will continue to worsen over the coming years had prompted it to review for downgrade the Baa3 bond and issuer rating of government of The Bahamas.

Surely, Moody’s proposed review for downgrade of The Bahamas was prompted, amongst other things, by the official statements in the budget communication presented by the minister of finance during the budget debate on May 31, 2017. In that budget communication, the first ten pages contain an unprecedented partisan defence of the 2007–2012 Ingraham FNM government’s alleged achievements and the Christie PLP government’s alleged failures between 2012–2017. The communication asserts that “the fiscal situation in the current fiscal year is far bleaker than we could ever have imagined”.

“Our predecessors have literally left us with a cupboard that is bare.”

The minister of finance stated the $100m GFS deficit forecasted 12 months ago was now expected to be around $500m or five times more than forecasted; a shortfall of $216m in the recurrent revenue collections; a $400m slippage in the GFS deficit; the recurrent expenditure during the year amounted to some $137m more than had been forecasted; with $21m increase in debt redemption and $27m more in higher interest payments on government debt; and with total government direct debt of $6.5bn, or 71.5 per cent of GDP.

Clearly, the unintended consequences of the accusatory context of the “official statements” on the Bahamian economy during the budget debate, without any careful blueprint for an aggressive growth strategy, prompted Moody’s review to downgrade the bond and issuer ratings of The Bahamas.

However, Moody’s made it quite clear that a further downgrade will depend on “the likelihood of stabilisation of the government’s debt ratios over the coming years”. Further, Moody’s states that its review “will examine whether the debt trend is likely to continue to deteriorate, or whether the macroeconomic and policy conditions that would support the stabilisation of the government’s debt metrics are likely to crystalise”.

Bottom line: a further downgrade will depend on how successful the government will be in maintaining fiscal discipline and crafting and implementing a growth strategy to reverse the current unsustainable trajectory over the next five years. This is no time to engage in a blame game, this is a time to get down to the serious business of growing the Bahamian economy and shifting the development paradigm in a more sustainable direction.

The government of The Bahamas, with an open economy in crisis and dependent on international confidence, does not have the luxury to engage in any further loose talk. The obligations of the government of The Bahamas are continuous, irrespective of change in political parties, therefore confidence in the capacity of the state should never be compromised for partisan political consideration.

Cautionary examples from our past should have taught us to avoid such loose talk from government officials. For example, in March 2008 then Prime Minister Hubert Ingraham, in the House of Assembly, while criticising the Christie administration with respect to the concessions that it had granted to the Baha Mar project, expressed doubt Baha Mar had the $400m in equity financing that it and its principals, Darkis and Sarkis Izmirlian, had committed to and whether it would meet the March 2009 deadline for fulfilling its heads of agreement commitment. Two days later, Harrah’s Entertainment backed out of a joint venture with Baha Mar.

Bahamian government leaders do not have the luxury to talk-down the Bahamian economy or engage in emotive partisan declarations which undermine the confidence of multilateral bodies, rating agencies and the local and international investors.

The general election campaign is over. Now is the time for the government to cease and desist from the constant allegations of misfeasance, abuse and corruption by the previous government officials and focus its attention on solving shifting our development paradigm to a more sustainable economic model. Moody’s announcement should signal to us that we cannot squander the opportunity to correct the ship of state in a blame game.

Stafford Sands demonstrated in the early 1960s when he invited the then leader of the PLP, Henry Milton Taylor, to join him on several trips to Europe to promote year-round tourism and financial services in The Bahamas, that the successful shift of a development paradigm requires innovation, creativity and bipartisan cooperation. The Bahamas has not added a substantive sector to the economy since. To expand the productive sectors of the Bahamian economy requires all hands on deck!

All patriotic Bahamians want the public resources of The Bahamas to be used solely for the public good and not personal aggrandisement by public officials. Any information relating to misfeasance, corruption and wrongdoing by public officials in previous administrations should be turned over to the able attorney general to be investigated and pursued either in a commission of inquiry, civil action for misfeasance or criminal prosecution. Let the chips fall where they may.

In the meantime, stop the loose talk, get on with the serious business of governing, reversing the current unsustainable trajectory and growing the economy. We all have a stake in the success of this undertaking.

• Alfred Sears, QC, is a former minister of education and attorney general. He represented the Fort Charlotte constituency for the Progressive Liberal Party from 2002-2012.