Finance Minister Peter Turnquest.
By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The government is facing “a real conundrum” in devising an effective rental assistance initiative because it would require the banks to “freeze” landlord loans, the deputy prime minister has admitted.
K Peter Turnquest, responding to questions after a Zoom presentation to Old Fort Rotary Club members, said the involvement of three different parties in the tenancy chain represented “a huge challenge” in coming up with a relief programme that works.
He added that a further difficulty facing the Minnis administration was the continued uncertainty over “where the bottom is” in the COVID-19 pandemic, and how much the provision of rental assistance to tenants will ultimately cost given that the government’s financial resources are already being strained to the limit with an $800m deficit now projected for this fiscal year.
Mr Turnquest confirmed that the government has appointed a committee to study, and recommend, how a rental assistance initiative can be implemented, but admitted “this is a huge challenge” given that individual, family and business tenants are all struggling to make due rental payments to their landlords amid the economic lockdown imposed to fight the virus.
“The challenge for us in intervening in this is that we don’t know where the bottom is, and how many people require assistance,” the deputy prime minister added. “We have to look at it from both sides.
“The landlord typically has a mortgage on the property that depends on rental income to service it. If you say to the landlord that you have to give a 30-day or three-month moratorium on rental payments, you have to back that up with the bank giving him a similar moratorium.”
Mr Turnquest added that the various COVID-19 customer assistance initiatives implemented by Bahamas-based commercial banks all involved loan deferrals that merely delayed the payment of due principal and interest payments until a later date when the pandemic has passed.
This does not represent a waiver or forgiveness of the debt, as Mr Turnquest acknowledged by saying: “The interest continues to roll. That’s a real challenge figuring out that conundrum.
“The Government has a committee looking at that, and which will make recommendations to it, and see if we can get financial institutions to freeze loans for a period. I don’t know if that’s possible. We’ll see.”
The deputy prime minister added that a rental assistance initiative could also be exploited by those with the means to still pay their landlord the due sum, but he also pointed out that the Department of Social Services already provides such support to those truly in need.
Tribune Business previously reported that commercial property landlords are “walking a very delicate tightrope” during the COVOD-19 pandemic by making offers of 50 percent rental discounts/deferrals to ease the pain and retain as many of their existing tenants as they possibly can.
Mr Turnquest, meanwhile, said the cruise line investments being counted on to revive Grand Bahama’s economy “are still on” despite a global industry shutdown that has forced both Carnival and Royal Caribbean to raise billions of dollars in new capital to ensure they can survive the pandemic and emerge on the other side.
Carnival said it had committed to investing $200m in developing its private Grand Port in Freeport, while the Royal Caribbean/ITM joint venture signed to acquire the Grand Lucayan resort - and redevelop Freeport Harbour - in a $300m deal just days before the cruise sector was confined to port for what looks like being a duration of several months.
“As we understand it, today those projects are still on although admittedly delayed, and we just hope they come through and we come to the bottom of this economic challenge relatively quickly,” Mr Turnquest said.
One source familiar with the Grand Lucayan situation, speaking on condition of anonymity, said Royal Caribbean and Carnival would likely need a year after resuming cruising itineraries to make a move on their Grand Bahama projects.
“We’re hanging on by our finger nails, in my opinion, The Bahamas generally and the Government, as far as the hotel is concerned,” they said. “They [Royal Caribbean/ITM] won’t be ready to do that for 12 months at least. They won’t be making money for at least that period. They’re going to lose billions as a result of this pandemic.”
Mr Turnquest, however, voiced optimism that the Inter-American Development Bank’s (IDB) $170m in financing will eventually help transform The Bahamas into a renewable energy leader. He added that the planned solar roll-out across the Family Islands would help reduce energy costs both there and in New Providence as the latter will “not have to subsidise” those locations any longer.
“It’s a win-win all around,” the deputy prime minister said. “We’re making progress; a little slower than I would like, but we’re making progress. I think, at the end of the day, we will have a project that delivers value for the Bahamian people for years to come and we will become a leader in this technology for years to come.”
Comments
RealTalk 4 years, 8 months ago
If the rental plan was flawed, PM Minnis should have never mentioned rental assistance. Some landlords were depending on that especially if that's their only source of income.
Well_mudda_take_sic 4 years, 8 months ago
We need a new government.
birdiestrachan 4 years, 8 months ago
Turnquest it is a win. win all around.
Turnquest is a spin doctor he is just spinning and telling lie after lie.
$9.000 per month just for rent. that is salary for quite a few employees.
Turnquest and them love to live high and tax the poor.
proudloudandfnm 4 years, 8 months ago
Less than the cost of one of Fred's trips.....
hrysippus 4 years, 8 months ago
This is refreshing, to see government ministers not pretending to have all the answers. We had more than enough waffling and obscurification with the last administration.
ThisIsOurs 4 years, 8 months ago
"Turnquest it is a win. win all around."
Whenever someone asks me my opinion, the first thing I say to them is, I am not in your situation. Only you can make the decision. When you looking at no income and the baby crying and the husband and wife up late at night thinking...they een thinking this is win win. But someone have to be out the hole to help people out of it. If everyone was in the hole God help us all.
TalRussell 4 years, 8 months ago
Makes me so sad when talk flowing deputy prime minister office has it how crown's comrade deputy gets himself up in what they've best can be described as in 'a real conundrum of a crack' whenever he's the minister on-call be at ready offer the kiss of apology on behalf the First among equals, rectum. Can't just write these kinds of stuff. Just, can't. Nod once for yeah, twice for no?
professionalbahamian 4 years, 8 months ago
Maybe this mess will bottom out when nations work together and decide to move forward with opening society completely for all but the very vulnerable, everyone wearing face masks etc. supply protection and disinfecting services/ supplement primarily. What recovery numbers are you looking to meet- are you looking for an 18 month closure?)
Decide and coordinate as a group of nations that by say July 15th or August 15th that all countries agree by signature to be 80% open. (Cruise ships won't be part of the group reopening by then). Countries should agree to a proportional adjustment on loan amounts owed to each other without condition and right off the interest (NOT deferred) for the next two years that may get everyone through.
If fear is not overcome and economies not opened collectively relatively soon, people will likely meet their demise otherwise from a lot more than COVID 19.
( By the way all retail and wholesale stores need to be open right away regular hours- just institute curb side pickup with a phone number posted outside, numbered parking spaces awaiting pickup and a bank card payment. People know or will arrange with friends with cards and ways to pay electronically).
charlie 4 years, 8 months ago
Not all landlord owe the bank for their rental property but depend on the rent to subsidize their income especially many retired older persons like my mom, once she had paid for her low cost home, built a small rental efficiency furnished to help subsidize her income and along with her monthly pension, now with this going on, many tenants are not paying because they are unemployed and just trying to buy food for their families and many are not paying because they are taking advantage of this situation. unfortunately many since hearing the pm speak about rental assistance had plan to pay rent but are now waiting for the government to do so although they have the means, the government have to step in. however, deferring bank payment for landlords that have property rental is great but this will not help other landlords who do not have a bank loan but still depends on the income just like a job to survive what then,
JanT 4 years, 8 months ago
It seems to me that since the government doesn't have the money to help that they need to allow Bahamians to make their own money in order to meet their financial obligations. The way to do this is to allow them to go back to work safely. Think about it. The biggest problem we have with the virus is in Nassau. Most outer islands have no cases, Grand Bahama is down to two active cases with no new cases in over 2 weeks. I appreciate that Nassau can't open as quickly but allow the rest to open. The more people who are working are more people who won't require so much government assitance.
Keep the 9pm curfew for now, require masks and social distancing measures, open all businesses with safe practices in mind. Allow the beaches to open so that people can go out in the fresh air rather than going to the grocery store because they're bored and just want to get out of the house.
I realize that many of these islands are tourism based and until we can open our borders some will still not be able to work regardless but if we can open up the islands that aren't heavily affected it can then be a model later of how to open New Providence and then the country itself.
At least we'd then have as many people back to work as possible which will ease up on government resources just a little.
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