The Tribune

• Needs ‘clarity’ from PM on functions and membership

• Member says reforms akin to ‘fox watching hen house’

• In Bahamas’ ‘best interests’ Council not ‘watered down’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ main fiscal watchdog is in limbo until its members obtain “clarity” from the Prime Minister on whether their appointments remain valid and how they are to “function” under the new legislative regime.

Gowon Bowe, the Bahamas Institute of Chartered Accountants (BICA) representative on the Fiscal Responsibility Council (FRC), last night told Tribune Business that himself and his four colleagues all want confirmation that they will be “acting within the authority designated to us” if they continue in their present posts.

In particular, they are seeking clarity from Prime Minister Philip Davis KC who, in his capacity as minister of finance, now has responsibility for the Council, as to whether they remain members until their original appointments expire or if they are considered “terminated” due to the new Public Finance Management Act coming into effect.

Mr Bowe conceded that the new Act gives the impression of “the fox watching the hen house” because all five Council members are to be appointed by the minister of finance, who is responsible for the very ministry they are supposed to be scrutinising, instead of them being recommended by the House of Assembly speaker as under the initial legislative regime.

And, given that the Council plays a critical role in The Bahamas’ enhanced fiscal transparency and accountability regime, he added that it was “in the best interests of the Government” and the nation to reassure the likes of the International Monetary Fund (IMF), Moody’s and Standard & Poor’s (S&P) that there is no intention of “watering down” this framework.

Speaking after Kwasi Thompson, the Opposition’s finance spokesman, last week challenged the Government as to when several overdue Council reports will be published, Mr Bowe told this newspaper: “The Fiscal Responsibility Council and it’s work is really pending confirmation from the minister of finance.”

He explained that the new Public Finance Management Act 2023, which separate sources last night said took effect on July 1 this year, in repealing and replacing the previous legislation passed under the Minnis administration “effectively shifted the responsibility and powers to appoint persons to the Council to the minister of finance from the Speaker of the House of Assembly.

“They were other amendments made on the basis of what they held out as efficiency, but it did weaken the independence and autonomy of the Council at least from a perception perspective,” Mr Bowe said. “The minister of finance appointing the Fiscal Responsibility Council is a little bit of the fox watching the hen house.

“From that perspective, there is still the practical implementation of the new structure. As you can imagine, existing members would want clarity from a personal reputation and personal liability perspective. I think all of us come various professional designations and professional careers that warrant them ensuring all is being done to maintain the actual autonomy, the reporting functions and an understanding of how reports are distributed and continued in that regard.

“Since the legislation was amended, and the repeal of the old Act and passing of the new one, the Fiscal Responsibility Council has not been constituted under the new regime.” As a result, Mr Bowe said the key question - as yet unanswered - that he and his fellow Council members have is whether they are to remain in their posts until their initial appointments expire or if they are to be deemed “terminated” by the change in legislative regimes. 

“They want to be appropriately appointed, and even persons like myself want to be very clear that we are acting within the authority designated to us,” he added. “This is one for the Opposition to raise questions and the Government to clearly articulate what the transition arrangement is and the new functions of the Council. There are a number of areas within the Council’s remit that have changed.”

Those changes include the fact that the Council’s $150,000 annual Budget now comes under the Ministry of Finance, as opposed to the House of Assembly, with the former now responsible for providing resources to the very body supposed to be scrutinising and overseeing its fiscal policies and actions. Mr Bowe said from a practical standpoint the Government has continued to communicate and facilitate meetings with existing council members.

The five-member Council plays a critical role since it is charged with examining whether the Government’s annual Budget, Fiscal Strategy Report and other measures align with set fiscal responsibility targets and principles. To-date, though, it has released just two assessments - on the 2020 Fiscal Strategy Report and the 2021-2022 Budget.

Mr Thompson, the FNM’s finance spokesman, last week released a statement challenging the delay in publishing the Council’s assessments of both the 2021 and 2022 Fiscal Strategy reports.

“Despite another seemingly idle promise from the Prime Minister, Bahamians have still not received an update on the current composition of the Fiscal Responsibility Council, nor a timeline for when the Council will produce its delayed reports,” he blasted then. “The PLP continues to make a mockery of the principles of accountable and transparent management of the country’s affairs.”

Mr Bowe added: “The Government will have its own advice and needs to clarify why this makes it as independent and effective as possible, or make the necessary amendments to advance credibility and confidence in the council going forward.”

Asked whether the key fiscal watchdog is in limbo, he added: “A lot of it boils down to: Does the Council and members as currently structured continue or are they deemed terminated under the repeal and replacement of the legislation and the direction of new powers coming from the minister of finance. I think that answers your question.

“Ultimately, the Fiscal Responsibility Council is deemed to be an advancement in the accountability framework of government and, certainly from an external observer perspective, whether that be the rating agencies or multilateral lenders, it would certainly be in the best interests of the Government to reassure others that this framework is not being watered down in any way and it will give it full support and resources warranted to maintain an independent body.”

Mr Bowe said that while Opposition questions on the Council are justified, it should avoid the ‘blame game’. He added: “This is not a case, I don’t believe, of a finger-pointing exercise. If they couch their questions from the perspective of how to maintain the greatest confidence and credibility, as opposed to mud slinging, those questions will be very solid and I believe the thinking population of The Bahamas would like to have those answers.

“It has to be from the perspective of advancement of the Council... This is one of those where a fisherman never calls his fish stink. The Opposition needs to come at it from a positive perspective as opposed to mud slinging and finger pointing.” 

The Fiscal Responsibility Council’s website discloses that Holland Grant, the Bahamas International Securities Exchange’s (BISX) chief operating officer, has replaced Kevin Burrows as the Chartered Financial Analyst (CFA) Society of The Bahamas representative, bringing its membership back up to the mandated five.

Besides himself and Mr Bowe, the Council’s other three members are Christel Sands-Feaste, the Higgs & Johnson attorney and partner, representing the Bahamas Chamber of Commerce and Employers Confederation (BCCEC); Khalil Parker KC, who holds the Bahamas Bar Association’s seat; and Dale McHardy from the University of The Bahamas (UoB).

The Prime Minister pushed back hard over concerns regarding the Fiscal Responsibility Council’s independence when the new legislation was debated. Philip Davis KC, in closing the mid-year Budget debate, argued that the Council’s previous structure and set-up are “unworkable” because there were no safeguards within the Fiscal Responsibility Act to ensure those selected can perform the tasks required.

“The Fiscal Council as constituted in legislation was unworkable. Vital issues had not been considered in designing the membership composition of the Council,” he asserted. “There were no guardrails to ensure that the composition of the Council adequately enables them to perform the job they are being asked to do.

“This is not to say that they are not professionally accomplished individuals, but what the public needs is surety that the Council was composed in a way that maximises their ability to get the job done.”