PLP leader Philip Davis. (File photo)
By RASHAD ROLLE
Tribune Staff Reporter
rrolle@tribunemedia.net
OPPOSITION Leader Philip “Brave” Davis said the country is headed toward a financial crisis and that he is certain it will face a credit downgrade.
He said at a Progressive Liberal Party press conference yesterday: “We are on a fiscal cliff, falling, there is a financial crisis that we think is looming and looming large. A downgrade is for certain. We’ve been there but they’ve been able to gloss over and paint a picture that was not what we believe is right.”
Mr Davis spoke after last week’s communication in Parliament by Deputy Prime Minister and Minister of Finance Peter Turnquest. In large part because of Hurricane Dorian, the deficit for the fiscal year has ballooned to $677.5 million and the government plans to borrow $507.9 million to meet the shortfall, Mr Turnquest said.
According to the government’s 2019 Fiscal Strategy Report, the debt is projected to increase by $1.3 billion over the next five years.
Mr Davis said: “This administration is now at a crossroad. It can no longer pretend that it has a handle on this self created fiscal crisis. The impact of Dorian cannot be used as the reason for the obvious decline in the government’s ability to provide basic public service. Many Bahamian businesses have failed or are now on the verge of failing because of the gross fiscal mismanagement of this ‘balance sheet’ administration who ignores legitimate contractual obligations to achieve contrived and elusive deficit targets.”
Mr Davis said the government should establish an Economic Advisory Council “forthwith” to look at the fiscal and economic state of the country and design a social contract that would “provide binding guidelines for expenditure, revenue, wage and pension reform policies over the next five years.”
“This is a perilous time for the Bahamas as the government has proven itself incapable of managing the economic and fiscal affairs of this country,” he said. “No amount of hubris, arrogance or grandstanding by the current minister of finance can change this reality. It would be incredibly selfish and unpatriotic of me and my political colleagues to watch and do nothing as this administration through sheer incompetence drives this country over a fiscal cliff. We believe that the true fiscal state of this country is worse than being reported by the government as blatant political considerations now seem to govern the reporting and classification of government expenditure and revenue. One obvious example is the treatment of the purchase and ongoing operating subsidy to the Grand Lucayan, amounting to $77 million in expenditure, is being classified as an investment so as to exclude it from the deficit calculation. There are others: the shareholder loan to Aliv of $10.5 million, the treatment of the loan to the Bahamas Power and Light of $15 million and VAT refunds to Buckeye and Statoil estimated at $50 million.”
The economy, according to the government’s strategy report, was expected to grow by 1.7 percent in 2020 but is now projected to contract next year by 0.6 percent because of anticipated weakness in tourism activity in the first half of 2020.
“Employment conditions in The Bahamas are also expected to worsen due to the disruption to business activity and productive capacity in both Abaco and Grand Bahama, which account for 2.6 percent and 13.8 percent of the labour force,” the report said.
In September, the country’s tourism sector registered a 12.8 percent contraction compared to the same period last year, with air and sea visitors posting declines of 14.7 and 12.4 percent respectively.
Responding to Hurricane Dorian will cause a departure from the government’s fiscal targets for the next five budget periods at least, with compliance possibly resuming in the 2024/2025 fiscal year.
According to the fiscal strategy report, the percentage of debt to GDP is projected to increase to a peak of 66.2 percent in 2021 before declining. However, the report notes there are potentially major risks to the government’s projections, including another hurricane or less economic growth than anticipated.
For this fiscal year, the government projects revenue loss of $236 million and an expenditure increase of additional $302.6 million.
Comments
Well_mudda_take_sic 5 years ago
Both the PLP and FNM alike have taken us to the precipice of the fiscal cliff......with the IMF waiting in the background to push us over it. LMAO
JackArawak 5 years ago
appoint an economic council ''forthwith''....what a bone head, (a) he could have done that and (b) it's 2019, please stop using Victorian language.
Sickened 5 years ago
Davis got jokes! What an imbecile. He and his government marched us to the cliff and started pushing thousands of poor people off. Thankfully the survivors smartened up and voted in people who have finally erected a fence (not a strong one mind you) to try and protect the country from the PLP. Unfortunately the fence is only temporary and the PLP are sure to remove it if they ever get back into power.
joeblow 5 years ago
... yep, the PLP's friends, family and lovers government funded scheme has done far more to get us near the edge of a 'fiscal cliff' than anything else!
birdiestrachan 5 years ago
This cliff is an FNM Cliff. Smith rent 9.000. tommy rent 12.000 the travels and all who wish to go may. The spouse a new office with 10.00 0 just for tea.
The lies about Bah Mar and the spy bill and the 60 increase in VAT it has taken away the buying power of many. doc and Turnquest are both taking the Bahamas into a recession created by them.
What about doc jetting up and down is it his Jet?
joeblow 5 years ago
... I'm guessing you only read the newspapers AFTER the PLP are out of office?
Sickened 5 years ago
Lol!
sheeprunner12 5 years ago
Brave should know ................... the PLP drove us up to the cliff
geostorm 5 years ago
Goodness, this gave me a good laugh! Brave Davis, you have got to be kidding. Where were you during the PLP's term in office? If my memory serves me right, you were at the helm and part of the reason why we are about to fall off the cliff!
BONEFISH 5 years ago
This fiscal problem did not just happen overnight or during the previous PLP's term in office.Those problems were there from the late sixties and early seventies.Bahamians love to play crazy and try not to solve certain problems.Just pray and it will solve itself.Okay. This problem result from quite a number of things. They include:
Those are some of the reasons we are in this mess today.These and other unlisted reasons. It may be very painful in this country in the next few years.
licks2 5 years ago
I can see ya "lil" PLP there!!! BUUUUUTTTTTTTTTTTTTT. . .I carn even push one strand of hair in between what you said up there. . .ON TARGET THERE GOOD SIR!!
SP 5 years ago
Astonishing that Brave did not consider himself and his political colleagues "incredibly selfish and unpatriotic to watch and do nothing" as Perry Christie's administration through sheer incompetence drove this country over a fiscal cliff with 5 successive downgrades!
bahamianson 5 years ago
Not to mention people are still bringing in cars and not paying a dime in taxes, connected people are still not paying their electrical bills, water bills etc. People are still buying drivers license , etc
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