The Government should have increased the rent paid by the US administration to lease the Andros-based AUTEC base, a former leading banker told Tribune Business yesterday, arguing that this and other creative measures could have avoided the pain imposed by the Budget's $100 million worth of tax increases.

Al Jarrett, former head of FINCO and an ex-Bank of the Bahamas International chairman, said an increase in the per annum AUTEC rent was warranted because the base, established some 37 years ago, was only paying $1 million more now than when it was created.

Arguing that inflation had increased by some "300 per cent" since 1974, Mr Jarrett argued that the US government should be paying much more lease the base, known as the Atlantic Undersea Test and Evaluation Center. Based on his arguments, it would appear he feels the US should be paying closer to $30 million per annum to the Government - almost $20 million more than Nassau receives today.

"We signed an agreement for the AUTEC base in 1973 for $10 million a year," Mr Jarrett told Tribune Business. "We're just earning $11 million a year 37 years later.

"We should be able to renegotiate that lease. We have to be sensible over these things. We've had a $1 million increase in 37 years. These are the kinds of things we could have done in the Budget."

Mr Jarrett made other suggestions that he said could have saved the Bahamian government and taxpayers some $150 million in the 2010-2011 Budget year without negatively burdening the private sector and ordinary people.

While many are likely to challenge his estimated $150 million savings estimate, Mr Jarrett said his suggestions could, if they had been implemented, also acted as a stimulant to the Bahamian economy, adding his voice to those calling for an interest rate reduction.

"I have some views on how we could have impacted our debt reduction without costing the country anything, and be a little bit of a stimulus," Mr Jarrett said.

He told Tribune Business that "the stars are aligned" for the Central Bank of the Bahamas to cut its discount rate (which determines Bahamian Prime and, in turn, all Bahamian dollar lending rates) by between 1/2-3/4 of a percentage point.

With the Bahamas' external reserves standing at around $900 million presently, and commercial banking system liquidity at near $600 million, Mr Jarrett said there would be no negative impact to the monetary system from a reduction in credit/borrowing costs.

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