The Tribune

• Responsibility Council uncertainty ‘critical shortcoming’
• Member warns it exposes Gov’t to local, global criticism
• No independent scrutiny of public finances for 8 months

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The failure to revive a key fiscal watchdog is “a critical shortcoming of the Government” that raises questions over whether it is paying “lip service” to transparency and accountability, it was argued yesterday.

Gowon Bowe, one of the Fiscal Responsibility Council’s five original members, told Tribune Business it has been left “lingering too long” by the Davis administration with its ability to scrutinise annual Budget projections and actual spending at a standstill since the Public Finance Management Act was implemented in August 2023.

With many Council members believing the Act’s passage means their appointments are no longer valid, he added that his personal “outreach” to the Prime Minister in a bid to end the uncertainty and the body’s ‘in limbo’ status has yet to provoke a response.

Warning that the Government is exposing itself to “domestic and international criticism” by not reviving the Council, Mr Bowe said the situation raises questions as to whether it is fully committed to fiscal transparency as a “principle” or if it is simply paying “lip service” and “rhetoric” to the concept.

The Council has effectively been non-functional for at least eight months, and the Fidelity Bank (Bahamas) chief told this newspaper: “There has been, from my perspective, a sort of outreach to the Prime Minister in relation to it. I think this needs to be resolved because it has been lingering too long.”

Asked whether Mr Davis and the Government have responded, Mr Bowe replied: “The short answer is ‘no’ in terms of confirming the appointments or changing the appointments, and the functions and operations of the Council. There hasn’t been anything relative to the Council’s operation.”

The Prime Minister’s spokesman, contacted for comment yesterday evening, requested that a message detailing Tribune Business’s inquiry be sent so that it could be passed to Simon Wilson, the Ministry of Finance’s financial secretary, for reply. No response was received before press time last night.

The five-member Council, which 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, is therefore not functioning. To-date it has released just two assessments on the 2020 Fiscal Strategy Report and the 2021-2022 Budget.

Besides Mr Bowe, who represents the Bahamas Institute of Chartered Accountants (BICA), the Council’s other members include 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).

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

All were appointed under the statutory regime that was repealed last year by the Public Finance Management Act. The latter changed the process for selecting and appointing Council members, switching this from recommendation by the House of Assembly speaker to being appointed by the minister of finance (currently the Prime Minister), who is responsible for the very ministry they are supposed to be scrutinising.

As a result, the existing Council members - with the possible exception of Mr Bowe - no longer consider themselves appointed given the absence of formal notification or confirmation as to their standing by the Davis administration. This has resulted in the independent fiscal watchdog’s work grinding to a halt.

Mr Bowe, who yesterday agreed that handing the power to appoint Council members to the minister of finance is akin to “the fox guarding the hen house”, said of the Government: “They are the ones who have the ability to carry out the action necessary to do the appointment.

“While I have stressed, and continue to stress, the importance of getting it done they are the ones that have to do so. There are a number of lawyers on it [the Council] and, as far as they’re concerned, it has expired because of the way that the legislation is written it was to be approved by the Prime Minister [as minister of finance].”

Mr Bowe said he has taken “a less binary position, if you will”, and is willing to remain in post and continue the work as “there are external actors who would like to know there are independent eyes” scrutinising the Government’s finances. However, he acknowledged that this will only prove to be “optics” in the absence of “formal appointments and the functional exchange of information”.

Access to the “underlying models” that informed the Government’s fiscal projections, and key civil servants and consultants involved in the process, will be limited to non-existent without a properly-formed Fiscal Responsibility Council, thereby nullifying its role and impact of its work.

“To be honest it is a critical shortcoming of the Government at this point in time,” Mr Bowe told Tribune Business of the Council’s current status. “Whenever you make the public pronouncement that you are all about transparency, but the independent verification framework as legislated or as administered is presently not in place, you ask the question: Is it better to have the law not enforced or not have the law at all?

“You have the same result. While this administration may have criticisms of the framework structure or operations, they have not replaced it with something better or something that’s extensive. They have left it in abeyance, which is worse than not taking what was there before and correcting and developing it at one time.”

Mr Bowe argued that the Davis administration had “watered down” the legislation and Council itself by “putting the appointment power in the hands of the minister of finance, which feels like the fox watching the hen house”.

“You have not carried out the appointments to satisfy that there is an independent and challenge mechanism,” he told the Government. “You open yourself to domestic and international criticism that says: ‘Is fiscal transparency and act of lip service or a principle that you wish to live by? It raises questions of whether your rhetoric is fiscal transparency or your principle is fiscal transparency.

“It’s important. We are an international financial centre. We are often in the news, including around climate change, and the Government is doing a good job getting our name out there. But whenever you put yourself in the spotlight you have to be prepared for the flaws when the spotlight is shone upon you.

“Those areas we are able to address, we should do so before we’re called out on it. We should do it as a proactive step rather than a reactive step.” It remains to be seen whether the Government addresses the Council and its membership in the upcoming 2024-2025 Budget which is now less than three weeks away and due to be presented in the House of Assembly on May 29.

The Council’s fate has already drawn the International Monetary Fund’s (IMF) passing attention, as it urged in its latest 2023 Article IV consultation with The Bahamas that “an independent process should be put in place to select members”.

Other Public Finance Management Act reforms have also been viewed as eroding the Council’s independence. Those changes include the Council’s $150,000 annual Budget now coming 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.