By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
A top banking executive yesterday said The Bahamas “won’t see any rebound in the economy for six months” at least as the “first wave” of loan deferral requests hits the industry.
Gowon Bowe, an ex-Chamber of Commerce chairman, told Tribune Business that the economic fall-out from the COVID-19 pandemic could “last for many months” given that The Bahamas’ core US tourism source markets still appeared to be near the peak of their infections/death surge.
He suggested that end-November’s Thanksgiving holiday likely represented the first chance for Bahamian resorts to enjoy “any meaningful occupancy”, given that the industry has now missed the balance of the peak winter season, and even that was uncertain.
Mr Bowe, Fidelity Bank (Bahamas) chief financial officer, added that this nation’s economic recovery from COVID-19 will have to take the form of a “public-private partnership (PPP)” rather than be a “government-driven stimulus” due to the Public Treasury’s cash-strapped condition and long-term consequences of loading Bahamian taxpayers with massive amounts of new debt.
“The reality is this could extend for many months. We don’t know,” Mr Bowe told this newspaper of the pandemic’s economic devastation. “All we can say is that traditionally in The Bahamas the September/October period is the slow months. The summer used to be slow, but it has picked up in recent years.
“If they’re not open by May 1, the hotels in terms of any meaningful occupancy will not see that until that until Thanksgiving..... I think we’re going to have to be open-minded, but I’m fairly confident we won’t see any rebound in the economy within six months. It will be longer than that. Hopefully between now and the end of summer we will see it bottoming.”
Mr Bowe said he had disagreed with the Central Bank’s initial focus on industry-wide three-month loan repayment deferrals since this potentially gave the impression that the COVID-19 crisis would be over within that period.
“Certainly, my disagreement was that we don’t know if it will last for that period of time, and it was giving the impression we’d be back to normal in three months,” he added. “While local elements of the economy would open up, we’re not thinking it will be three months, six months with tourism as confidence has to be restored in our primary market, the US.”
The Fidelity executive added that it was impossible to predict the behaviour patterns of US tourists post-COVID-19, and their willingness to get on commercial airlines and cruise ships and travel to The Bahamas once again. He suggested that, in the short-term at least, many Americans could instead elect to stay at home and “drive to the beaches in Florida” due to ongoing health concerns.
“The best we can do now is keep focused on developing various scenarios and plans, which I think the Ministry of Finance is working on,” he added. “This one, it’s fair to say, is not going to be a government-driven stimulus in The Bahamas.
“It’s going to have to be a public-private partnership using built-up savings and assets in The Bahamas with some government participation to structure it. We have to look at how, as a private sector and investor nation, we can put the recovery together. The Government has its constraints. It’s going to have to be very methodical, and everyone is going to have to participate in it.”
Mr Bowe said the full impact of the COVID-19 temporary lay-offs on the ability of borrowers to meet their loan repayments will start to come through by the beginning of May. He described March as “a mirage” given that most companies’ payroll had already gone through to carry employees’ to the end of the month prior to the national lockdown’s imposition.
“The numbers are going to start to pick up,” he told Tribune Business. “We’re in the middle of seeing the first persons applying, and what we’ve been spending time on is financial coaching and understanding their needs and requirements, and engaging with the customer.
“We’ve had a number of requests for extensions that are being considered on a case-by-case basis, and I imagine between now and government pay day we’ll see more of them coming in. It’s been a full four weeks; the tourism industry has effectively been off for one month.
“It’s a long journey and we can’t get ahead of ourselves now, and prohibit ourselves, from doing things down the road,” Mr Bowe added. “In reality, March for most people, the payroll had already gone through. March is not a good indicator, and we won’t know until the first week of May how much of these are ‘normal’ extension requests.
“We’re in the first month but I’d call it a mirage because it did not look problematic even at that time. It will ultimately be this month, April, when financial institutions see the first wave. We have to be careful that we don’t do something now that fails to reflect this may run for the long-term.”
Comments
Well_mudda_take_sic 4 years, 8 months ago
A sensible cautionary note.
Clamshell 4 years, 8 months ago
I think he is being overly optimistic. Many people will be unwilling to fly, unless they have to, until there is a vaccine. That likely will be more than a year. Cruise ships? Forget it.
Thanksgiving? I don’t think so. Next Easter? Well ... maybe.
ThisIsOurs 4 years, 8 months ago
I think there are people who will want to change scenery after being confined. The question is how many and can we assure their safety
TalRussell 4 years, 8 months ago
A top very credible banking executive like Comrade Gowon or not it's a much too optimistic plan for a rushed six months time period rebound colony's economy when eighty percent economy will be predicated upon how quickly air and sea tourism travel rebounds and we could be talking a bare minimum 12 months to 36 months if ever to meet just rooms breakeven operational costs colony's major hotels.
Even if the government eased up on ban to allow all stores and businesses to reopen today they will be lucky to operate at the 35 percent pre coronavirus levels and also afford to hire staff, pay their past due and current bills until PopoulacesOdinary have returned back and begun to earn the range salaries they had previously enjoyed and first played catchup on stacks unpaid bills. Thirty percent of stores and businesses will not make it across other side coronaviruses. Thousands PopoulacesOrdinary will forever lose their workplace private extended health car insurance and pensions.
The coronavirus will forever change how vacationing moods and demands millions and if they're going be comfortable to travel by air and, or sea. Nod once for yeah, twice for no?
K4C 4 years, 8 months ago
Overly optimistic, cruise ships alone may be a year in dry docks, in addition, this pandemic is hardly been subdued
Longislandview 4 years, 8 months ago
“Man makes plans . . . and God laughs.”
John 4 years, 8 months ago
While he is sayin 6 months, the Ministry of Health is preparing more beds for Corona patients. New infections in the US continue to be in the thousands and several thousand deaths yesterday . So it may be end of summer even before the ‘all clear’ for the Bahamas alone is declared . And that is the danger for persons who are taking out new loans to ‘save’ their businesses. In the US, for example, many of these loans have been consumed even before the businesses have been allowed to reopen. So by the time they do, they will be facing double or even triple the debt. Restaurants and bars are being told to pay staff and rent. But can you imagine paying 6 months of staff and rent? What you doing is artificially keeping these things inflated. In six months the lease may be worth half of what it is now so when the business does reopen it is still not viable because all the businesses around it are paying half the overhead, including staff and rent, and are not saddled with an oversized loan. And as Warren Buffet would say, stay debt free as much as possible, it not completely .
Dempress 4 years, 8 months ago
This sounds about right, although many people are still wanting to travel here. It doesn't put a complete damper on tourism with a solid controlled plan for how tourism can proceed, as locals are discussing now. We have a viable plan to proceed that will help small business and locals sustain, however the government isn't being optimistic enough. They tend to slow down Process and evolution of the Bahamas by sticking to old and outdated strategy that simply doesn't work for today's economy and generation of people. The people have the answers, the government just feels too bougie to listen to them, especially the women.
Porcupine 4 years, 8 months ago
The reality is the pandemic is just beginning in The Bahamas. And we're talking about opening up for business? A laudatory goal, but aren't we putting the cart before the horse? If all you have is a hammer, everything else starts to look like a nail. Spend your whole day, everyday around made up numbers and loans, and that's all there is, I suppose. Hopefully the warm weather will knock this down. As far as social distancing, our government seems to want to gather as many people in one place as possible. I have a hard time understanding their thought process, if there is one. How do you define the term reactionary?
sheeprunner12 4 years, 8 months ago
Gowan Bowe is masquerading as a financial expert ………. but he is just a closet 2022 candidate for the PLP …………. He is secretly hoping that Minnis dem mess up, anyway.
Well_mudda_take_sic 4 years, 8 months ago
Repost:
Bowe used to be about as FNM as they come; but today, like so many of us, he probably has as much disdain for the Minnis-led FNM government as he has always had for any Pindling or Christie-led PLP government. Bowe does admittedly have one significant attribute in common with most politicians though. He just loves to hear himself talk....almost as much as I enjoy posting comments to this website!
Wisdom4 4 years, 8 months ago
Mr. Bowe stands correctly, the Bahamas needs to re-open by May 1st. People will be less reluctant to fly to other colder countries such as Europe. The hotel industry will take a major hit in the Bahamas economy.
Is the government able to support the Bahamian people financially in the next 6 months to 1 year?
If not, Bahamian economy will drop. So! economy needs to re-open as long as people continue to follow the social distancing guidelines. The United States is re-opening business and more. Trying to get people back to work.
Sign in to comment
OpenID