The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former Chamber of Commerce chairman yesterday voiced concern that the government had sent “a message of dependency” through its 2020-2021 budget presentation.

Gowon Bowe told Tribune Business it “can be dangerous” to give the impression that the government alone will rescue The Bahamas from the COVID-19 doldrums given that it simply is not large enough to do all the heavy lifting by itself.

Arguing that the government should position itself as a “facilitator” rather than a “provider”, Mr Bowe said that since it only accounted for 25 percent of the economy recovery from the pandemic was impossible without the other “75 percent” - the private sector.

K Peter Turnquest, in unveiling the 2020-2021 budget, focused on the government’s massive borrowing and $1.3bn fiscal deficit as essential to preventing the economy’s collapse and social meltdown as a result of the 30 percent-plus unemployment rate.

Yet Mr Bowe argued: “The government only represents 25 percent of the economy. In order for there to be any meaningful recovery or meaningful rebound, it has to come from the 75 percent. If the government doubles what it does, it has limited impact.

“The government has to really focus its attention on being a facilitator and stimulating the 75 percent as opposed to getting into a scenario of being a provider. The [budget] communication gave the sense of being a provider for this downturn, and that can be dangerous as it sends a message of dependency.

“The government needs to send a message of being a facilitator, and that 75 percent is best able to recover. It cannot pick up the slack for the other 75 percent. It cannot expand its contribution by four times’.”

Mr Bowe also warned the government against placing its faith on a swift rebound, or so-called “V-shaped recovery”, from COVID-19 that involves a sharp contraction in economic output followed by rapid growth.

Mr Turnquest yesterday said such recoveries had been one “redeeming” feature of previous pandemics, but Mr Bowe countered: “I would caution on speaking about a ‘V-shaped’ recovery, as most economists are saying ow at best there will be a U-shaped recovery with a valley at the bottom - certainly not a sharp contraction and sharp recovery.”

The former chamber chairman added that the 2020-2021 budget had also failed to meet his hopes that it would set out a medium and long-term vision for the pathway to recovery.

“Basically, I will say that we have to demonstrate to persons what the period of pain is likely to be and what the trajectory of recovery is going to be, and the one year process doesn’t do that,” he argued.

Noting Mr Turnquest’s reference to saving the economy from drowning, he added: “I should say, having spoken to all professional trained life guards, that the best thing to do in trying to save an individual is to render them unconscious because they are fighting against uncertainty.

“Our stakeholders, bondholders right now are fighting against the floating devices out of fear and uncertainty.” This, Mr Bowe said, would have been addressed if the Budget had set out a longer term plan and vision.

James Smith, former minister of state for finance, likened the Government’s decision to go all-in in massive deficit spending and borrowing to a “Hail Mary pass” given the uncertainties over the timing and strength of any post-COVID-19 rebound.

“I think what’s happening here is the Government is throwing a Hail Mary,” he told Tribune Business. “What it means in effect is it’s a form of chance from game theory where you’re saying we’ve got to go for the long pass because we’re so far behind we’ll never win this game.

“Let me borrow all the money I can to carry me through this year and next year, and hope we have a recovery and economic boost because if not we won’t be able to borrow money at all.”

Other private sector sources, speaking to this newspaper on condition of anonymity, said they were also left uninspired and underwhelmed by the 2020-2021 Budget. Noting the absence of any focus on issues such as ease of doing business improvements and civil service pension reform, they suggested that the extra $9m allocated to the Ministry of Agriculture for food security initiatives was not sufficient to indicate the Government was serious on the issue.

“I can assert today that this government will make food security and sustainability a key priority over the short to medium-term as a policy that will add value for years to come,” Mr Turnquest said. “To kick off the push for greater food security, the Ministry of Agriculture has been allocated between its recurrent and capital budget the sum of $9m to begin to seed new and innovative projects in partnership with Bahamian farmers and the broader private sector. This will indeed secure the future of Bahamians, and the wealth of our nation.”

He added: “As a nation, The Bahamas imports over 90 percent of what it consumes. In 2018, our total imports valued some $3.5bn, the bulk of which comprised machinery and transport equipment, food and fuel. This equates to roughly 33 percent of our average real GDP over the last five years.

“The ongoing COVID-19 pandemic has demonstrated the importance of pursuing food security to ensure that we could meet some of our domestic needs at least in the short-term and expanding over the long-term, and thereby reduce our dependence on imports.”