The Tribune

* Concedes recovery strategy needs 'more flesh'

* Says short-term alternatives to tourism missing

* Again rejects new and/or increased taxes move

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The deputy prime minister yesterday pledged that the Government's upcoming Fiscal Strategy Report will seek to provide "the missing piece of the puzzle" to its COVID-19 economic recovery plan.

K Peter Turnquest acknowledged to Tribune Business that the Minnis administration needed to "communicate a more detailed" strategy to the Bahamian people - especially how it would deal with the immediate short-term consequences if the tourism industry failed to fire as expected.

Agreeing that there needed to be "more flesh" on near-term economic plans, Mr Turnquest said the Report - which was due to be tabled in the House of Assembly tomorrow but has been delayed - will seek to fill in the gaps and provide a comprehensive strategy on the way forward.

"I think it's true to say that we have not communicated to the public as detailed a plan as they might want and need," he told this newspaper, "but, at the same time, we've been working with the Economic Recovery Committee to determine a strategy for the way forward.

"I think the piece missing, if I were to criticise our efforts, is the immediate short-term piece: What do we do if tourism does not turnaround as we anticipate? What do we do in the interim while we wait?"

Mr Turnquest said the recently-unveiled $5m grant funding partnership, announced between the Small Business Development Centre (SBDC) and Ministry of Agriculture and Marine Resources, to boost production among farming and fisheries entrepreneurs was one component of the Government's short-term recovery plan.

He identified another as the so-called "Blue Economy", which involves maximising economic growth and environmental sustainability through controlled exploitation of this nation's marine industry, and is the focus of the Inter-American Development Bank's (IDB) recent $200m loan to the Government.

"There are other pieces to that puzzle that need more flesh and to be communicated to the Bahamian people," Mr Turnquest added: "That will hopefully address the short to medium term. That may be the part that needs more flesh to satisfy persons looking for that road map."

He said the Ministry of Finance "is working as we speak" on finalising the Fiscal Strategy Report, which sets out the Government's fiscal and economic projections. The deputy prime minister said the delayed tabling reflected the fact he is presently out of the country as well as the need "to wrap up consultation on various pieces of it".

The Government-appointed Economic Recovery Committee's report largely focused on medium to long-term objectives, as opposed to the short-term. While many observers argue that The Bahamas' tourism dependence means it has little choice but to hope for a strong, swift rebound in this sector, the Committee's near-term focus was largely on approving all feasible investment projects still in the pipeline.

Mr Turnquest, meanwhile, conceded that it will take time for The Bahamas to reverse the trend of successive credit rating downgrades by Standard & Poor's (S&P) and Moody's given that the Government's finances are only likely to return to the previously-set fiscal consolidation path in 2026-2027.

"I think the reality is it's going to take a little while for us to roll this back," he told Tribune Business after S&P pushed The Bahamas' sovereign creditworthiness further into so-called 'junk' status. "We've got to figure out how to grow GDP in the short-term without too much of a tax burden because the reality is that the cost of borrowing has gone up, which is another burden.

"We're projecting 2026-2027 for us to get back on the fiscal path where we were before Dorian. That's where we are. That's the reality." Mr Turnquest also acknowledged that a further external shock, such as another major hurricane following so swiftly behind Dorian and COVID-19, would have been "a game changer" for The Bahamas' economic and fiscal prospects.

"We've had everything crossed for this season," he added. "If we had any significant or minor damage at this stage it could certainly have been a game changer." With the 2020 hurricane season having two weeks to run, Mr Turnquest said The Bahamas' vulnerability to climate change and storms - something it has no control over - factor prominently in rating agency assessments of its creditworthiness.

"We live in hurricane alley," he said. "The fact is that risk is largely not able to be mitigated. When you talk about building resilience to climate change it's much easier said than done. Retrofitting existing structures for higher winds or storm surge, the cost of doing so is just not feasible."

As a result, Mr Turnquest said The Bahamas had to focus on what it can control, citing fiscal management and prudence as the key priorities. While S&P had suggested that the Government will have to look at revenue-raising measures, such as new and/or increased taxes, to counter the debt and deficit blow-out produced by COVID-19, the deputy prime minister again rejected this action.

"I don't think that is the answer, quite frankly," he told this newspaper. "If you have an economy that is already burdened, and will have difficulties growing, taxation is only going to exacerbate that problem. The answer is to provide the right kind of stimulus, and have more economic activity going and generate more tax revenue from additional sources."