The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition's finance spokesman yesterday slammed the decision to cancel the Central Bank's new headquarters project as "absurd", arguing it was "an ideal project" for providing a post-COVID economic boost.

Kwasi Thompson, former minister of state for finance in the Minnis administration, told Tribune Business there should have been "no reason to hold back" on the now-abandoned Royal Victoria Gardens location given that all the financing was in place and it was not costing Bahamian taxpayers a cent.

Speaking as well-placed sources, speaking on condition of anonymity, confirmed the project would have been financed from the Central Bank's retained earnings and profits, he demanded a more detailed explanation from both the Government and the banking regulator on why it has been abruptly cancelled.

Tribune Business yesterday exclusively revealed that the Central Bank has suffered an $8.92m write-off due to the project's abandonment, with further impairment hits to come in 2023. "We are very keen to know why it was this project, and again it was so advanced, why they put a stop to it," Mr Thompson told this newspaper.

"Unfortunately, we have not heard any reasonable satisfactory answer. Coming out of COVID, one would have thought this would be an ideal project because there was not any spending from the Public Treasury. It was a project ready to go, funding was in place, and we would have seen no reason to hold back on such an important project.

"It is what I would state as being wasteful, and unfortunately the Central Bank is being put in a position where it has wasted at least $9m. I suspect it was something that the Central Bank was required to do by the Government. I would again call on the Government to give a fulsome explanation of it, what they now intend for the Royal Victoria Gardens site and how the Central Bank will be accommodated - and where the Central Bank will be accommodated in future."

Noting that the Central Bank needs a larger premises, and is already having to lease space for staff, Mr Thompson said the proposed Royal Victoria Gardens headquarters "would have created scores of construction jobs and opportunities for small Bahamian sub-contractors" while adding to downtown Nassau's revival by complementing both the new US embassy and planned Supreme Court and judicial complex.

The banking sector regulator, in the financial statements attached to its just-released 2022 annual report, disclosed the extent of the immediate financial hit it has sustained as a result of not proceeding with a development where six years worth of work has effectively gone to waste.

Detailing the impact, note four in the financial statements on property, plant and equipment said: "The Bank’s ongoing construction of its new premises on the Royal Victoria Gardens (RVG) site located between East Street and Parliament Street, south of Shirley Street and north of East Hill Street in the city of Nassau, Bahamas, continued throughout the year.

"By resolution in Parliament, the Government of the Bahamas authorised the transfer of property to the Bank at a nominal cost of $10. The site preparation and demolition phase for the project began in 2020 and the architectural designs were completed.

"In March 2023, the Board of Directors approved the termination of the 'New premises project' and the transfer of the property ownership back to the Government. As a result, the Bank has recognised an impairment loss associated with this project totalling $8.92m as at year-end [2022]. Additionally, the Bank has estimated that additional termination fees will be recognised subsequent to year-end."

The Central Bank added that it "will explore alternative arrangements to meet its long-term accommodation needs", but the annual report's disclosures - that, in effect, $9m of the regulator's money has been wasted with further financial hits to come - will raise further questions as to why the project was abruptly abandoned and likely spark calls for greater explanation from both it and the Government.

John Rolle, the Central Bank's governor, has not responded to Tribune Business questions on the issue and has remained tight-lipped. No explanation is provided in the annual report, while for the Government, Michael Halkitis, minister of economic affairs, said it had suggested "the optics" of the project may not be the best so soon after COVID-19 and that other priorities should take precedence.

However, given the extent of the financial exposure already incurred, questions are likely to be raised as to why the project did not proceed given that the Central Bank was already so deeply invested. And the funding source was the Central Bank, and not Bahamian taxpayers via the Government, meaning the former was taking all the risk. It thus appears likely the Royal Victoria Gardens project was aborted at the Government's request for reasons that are not yet clear.

Meanwhile, Mr Thompson said the Central Bank has also contradicted the Prime Minister by describing the Government's accessing of $232.3m in International Monetary Fund (IMF) special drawing rights (SDRs) as a "loan" despite Mr Davis rejecting such an assertion on multiple occasions.