Search results for : bahamas parties
Showing 1 to 10 of 1000 results
JFB Limited Developers is "dusting off" Roker Point Estates, a shelved project on Exuma, and is investing nearly $2 million in a model home and "hill hiker" amid its renewed marketing effort.
The 91-unit development in Emerald Bay is riding a wave of recent activity on the pristine island, including the success of the $80 million Sandals Emerald Bay resort and the resurgence of Grand Isle.
John Goldsworthy, head of sales and marketing, Roker Point Estates, said the time is right to revisit development on Exuma. With millions already invested in infrastructure, including roads, a marina and utilities, he told Guardian Business "the table is set, now people just need to show up for dinner".
Development, he added, came to a grinding halt in 2008, but JFB Developers believes the worst of the recession is behind it.
"With the recent activity with Sandals, and in particular achieving more airlift, investment and exposure, we felt the time was right to dust off the project," he explained. "We have investors right now. We have finished the floor plan, we have costed it out, and plan to break ground soon."
Roker Point is now selling lots for $325,000. Goldworthy said prices have been reduced a whopping 60 percent to entice international interest from second-home buyers. With homes perched on 30 to 35 feet of elevation, the developers have just built a "hill hiker" to allow residents to access their individual slips down below.
The contraption, a first of its kind of The Bahamas, is part of the exhibit soon to be on display with the model home.
Goldworthy told Guardian Business the development hopes to achieve a number of sales this year, feeding off the momentum and investment now pouring into Exuma. He said several parties are already interested in purchasing lots, "but must carry out their due diligence first".
Executives from Roker Point are now attending boat shows and other exhibitions in Canada and the U.S. to spread the word about the revitalized project. The goal, Goldworthy said, is to house a population within five or ten years that works in tandem with its neighbors.
Guardian Business can confirm that Roker Point is now in talks with Grand Isle to possibly contribute to its $5 million expansion to amenities, including a new restaurant and beach club. In fact, Roker Point's office is now located in the penthouse villa believes this collaboration with Grand Isle and Sandals will be integral to the success of Exuma and the economy at large.
Last month, Grand Isle revealed to Guardian Business that it is targeting $25 million in sales after a Canadian investor ended its financial woes.
After going into receivership in 2010, the investor bought out 31 villas at Grand Isle and erased the debt.
A total of 47 homes are now privately owned, with the remaining 31 being sold off over the course of the next year or two, according to Michael Marco, a spokesperson for the project.
"When the developer went bust, they placed a dark cloud over us," he said. "But we have turned the corner since then. We paid off all the debt and the receivership has been resolved. The owners are now taking an active role in promoting [and] marketing the development."
Meanwhile, Sandals Emerald Bay, representing around $80 million in investment, has continued an aggressive marketing push to stimulate interest in the getaway, such as hosting the popular game show Wheel of Fortune and appearances on other programs.
A number of airlines now fly direct to Exuma from gateways in the U.S. and Canada.
Adam Stewart, the CEO of Sandals, aims to make the resort profitable by 2014.
"Do I think 2012 will be the year we break the back of it? Yes I do," he told Guardian Business.
"We will have a fairly good winter and our reputation in the marketplace is getting better. With a little luck, the world economy will start to behave. 2013 and 2014 will show that was a good buy and it will contribute to the bottom line."
The Progressive Liberal Party (PLP) yesterday released a 10-point plan to help struggling homeowners, which includes obtaining agreement from local banks to write off 100 percent of unpaid interest and fees for people facing foreclosure.
The party has promised to implement the plan if it is successful at the general election.
"Across The Bahamas, homeowners are struggling as never before. Many homes have already been lost to foreclosure, and many more Bahamians are sick with worry about their ability to keep their homes," the PLP said in a statement.
Among other things, the party has pledged to work with banks and other institutional lenders to agree to a 120-day moratorium on foreclosures. This moratorium would allow for the appropriate consultation to take place within the financial sector and with the Central Bank, and it would also allow the necessary legislative authority for the planned measures to be put in place, the party said.
Regarding the write-off of unpaid interest and fees, the PLP reasoned, "This should be acceptable to the banks as they would already have made provisions against these losses.
"Therefore, writing off the unpaid interest and fees would have no immediate financial impact on the banks. As for the delinquent borrowers, they would benefit from the fact that their outstanding balances would fall substantially."
Point three of the PLP's plan is to "actively encourage a reduction in the interest rate on the mortgages in question to prime plus one percent".
The party said this would be substantially below what most borrowers are paying, reflecting the impact of the government guarantee the party plans to put in place if elected.
The PLP has also pledged to "actively encourage" the banks and other institutional lenders to extend the loan repayment period under defaulting mortgages to the maximum allowed by the financial institution.
The PLP said that in return for the banks agreeing to those measures, the government, for its part, would guarantee the interest payments of the affected borrowers for five years through 2017.
The party added: "To assist borrowers who may not be able to meet interest payments and to help ensure the sustainability of the government's guarantee, we will create a special fund into which borrowers would pay an annual service fee of one half of one percent of their outstanding loan balances."
The PLP said this fund would be used to help meet the obligations of those borrowers who cannot pay their interest through 2017.
"The collective contributions to the fund would assist the government to cover the interest costs of those borrowers who fall into delinquency," the PLP said.
"This, in turn, would help reduce the direct cost to the government if called upon to make good on its guarantee. The fund would be there to cushion the cost to the government and by extension reduce the ultimate burden on the taxpayer."
Additionally, the PLP said it would pass any legislation necessary to ensure that homeowners who have accumulated savings in their pension funds can access those funds for the purpose of saving their homes from foreclosure.
The party also pledged to pass any legislation necessary to protect homeowners from foreclosure where they have already paid back more than a certain percentage of their mortgage loans.
This will require close consultation with the banks and other interested parties, the PLP added.
"Once you have reached a certain level of home mortgage debt repayment, you should have some assurance that you will no longer be in danger of losing your home," the statement said.
"This legislation would also vest powers in the Supreme Court, similar to laws in force in England, enabling a forced sale or foreclosure of homes to be stopped or suspended where the court decides that it is just and equitable in all the circumstances to do so."
The PLP said it would also pass new legislation to give greater protection to borrowers in relation to interest, add-on charges and other bank fees, and to bring under regulation unregulated lenders.
"This new legislation will also bring under stricter control and supervision the system of salary deduction so appallingly abused by certain financial institutions," the party said.
It also pledged to extend the "first homeowners" exemption from stamp duty to people who lost their first home in foreclosure but are trying to buy a home once again.
"The Progressive Liberal Party believes that helping distressed homeowners is the right thing to do and the sensible thing to do. It is an important part of getting the Bahamian economy moving and growing again, while at the same time creating an important social safety net," the PLP said.
"The PLP notes that the foreclosure crisis is of course related to record unemployment. The FNM has sought to blame economic problems on the global recession, but their fiscal and economic mismanagement have increased the nation's woes exponentially."
The party noted that in October 2008, Prime Minister Hubert Ingraham promised that his government would offer help to homeowners facing foreclosure.
In 2008, Ingraham announced: "For persons who would have lost their jobs, persons in the hotel sector who would for instance, be on short work weeks, and persons who for some other unforeseen circumstance are now unable to keep current in their mortgage payment, but who ordinarily sought to make their mortgage payments for their homes, we would like to ensure that the maximum number of persons who currently own their own homes in The Bahamas would continue to do so. And that they don't end up losing their homes because of what we consider to be this temporary setback, even though we do not know how long this temporary situation is likely to exist."
Ingraham added, "[We will] put in place a relief program for homeowners who are unemployed, or who because of circumstances clearly beyond their means, are unable to continue to keep current on their mortgage payments at the moment.
"And where banks are unwilling to work with them to continue to preserve their ownership of those homes, we will put in place a program to be able to assist such persons, probably as early as the beginning of next month, November."
But the PLP said yesterday, "He promised, but he did not deliver. Homeowners have found no support from the FNM government."
Asked yesterday to explain what the Ingraham administration's plan for struggling homeowners entailed, Minister of State for Finance Zhivargo Laing noted the prime minister did not outline a specific program when he made that announcement.
He explained that during the crisis, the government spoke with the banks and got an understanding of the various programs each bank had put in place, including interest only loan payments and payment deferrals.
"The banks had already demonstrated efforts on their own part to assist their clients. Many of them have been rolling over these programs," the minister said.
Laing said upon advice from the Central Bank, the government was encouraged by the various programs, but did not see how it could go beyond what was being done unless it was offering monetary relief to homeowners.
"In the circumstances we felt that beyond that there was not much to be done," Laing said.
Laing said that although the economy is recovering, there are still people who are still facing substantial arrears that build up during the course of the crisis, and the Ingraham administration intends to address this.
Responding to the PLP's proposal, the minister said, "Having looked at what they have put forward, I believe that what they have put forward is reckless, impractical and can cause serious injury to the domestic financial services sector of The Bahamas, and by suggesting so could put at risk current and future clients of that sector because it's simply a proposition that no sensible set of financial institutions, international or local, would find doable.
"Quite frankly, I think this just represents an extreme case of pandering by a political party desperate to give people some reason to believe in them, and I believe that their proposition can be contrasted by what will be a very thoughtful mortgage rescue program that we will put forward, a program that seeks to save the homes of hundreds and even thousands of Bahamians who have been faithful and consistent payers of their mortgages, and who by no fault of their own fell into hard times as a result of the crisis."
The Bahamas is a nation founded and built upon Christian principles. It is therefore expected that this week and in particular during the weekend, a vast majority of Bahamians will commemorate and reflect upon the death and resurrection of Jesus Christ. The reality is that the Easter story is one that we can all relate to in our personal and professional lives. The suspension of all rallies and political activities by all political parties in observance of Holy week is welcome news as it suggests a certain level of reverence for religion and spirituality by our political leaders . However, one can't help but wonder whether the candidates for this year's general elections, leaders and aspiring leaders in general appreciate the true cost of leadership with all of its triumphs and trials.
The life of Jesus tells the story of a man who was so sure of his calling from a very early age that even the temptation of being afforded the world before the debut of his ministry could not deter him from His ultimate purpose to save the world. He performed miracles and preached a gospel of repentance during his three and a half year ministry. However, Jesus received mixed reviews during this period and was not always accepted by all, but what is clear is that he bore the mark of a great leader and left behind a legacy for many generations to come.
The triumphant entry
The triumphant entry witnessed Jesus riding into the town of Jerusalem on a colt being greeted to shouts of joy and gladness from the multitudes that were present singing Hosanna unto Him. Leaders and aspiring leaders can learn a thing or two from this event which was well attended by genuine followers, disciples and sycophants. The irony of the Triumphant Entry is that the same crowd that praised Him within a matter of days ridiculed Him and called for his death. However, Jesus was not deterred by this because He was always sure of His calling and denied himself in spite of opposition. Leaders must be mindful of the vast audience that so easily massage their egos and appear to loathe them for such crowds are fluid and allegiances or positions are unpredictable.
Rejected by the system
The system indicted and convicted Jesus for his non-conformity with the status quo and His desire to bring freedom to the human race. The nature of the system is one that is comfortable with business as usual and taking a stand contrary to popular belief(s) is often frowned upon. A leader should be prepared to stand for his beliefs regardless of its contradiction to the general held notion and obvious opposition within the system. True leaders must be willing to be blacklisted for their beliefs to achieve their dreams.
Betrayals and denials
The betrayal by Judas and denial by Peter as clearly documented in the Bible will probably be recited multiple times during the course of this week. It is my hope that leaders, aspiring leaders and Bahamians in general accept the fact that they will have their fair share of Judases and Peters as they journey through life seeking to fulfil their God-given assignments. In the end as is commonly stated, we must be true to ourselves and be willing to walk alone. The betrayal and denial as noted in the preamble to the Easter story speaks to the role of greed, the love of money, loyalty and fear in discipleship and the following of any leader.
As Jesus prayed in the garden of Gethsemane, He asked His Father to "let this cup pass over me", speaking in relation to having to go to the cross to be crucified and all of the humiliation that came along with that. The thought of the burden of a mission and sacrifices attached to achievement of a vision can be so overwhelming on a leader that he/she tries to abort the dream. However, great leaders persevere; they push through the challenges with the ultimate goal in sight and declare like Jesus did - "Not my Will but Your Will Be Done".
The road to the Crucifixion is a painful, agonizing and lonely one. Jesus bore and carried His cross alone as He journeyed to Calvary to the jeers and insults of the crowd. One cannot help but reflect on the radical shift in the scenery of the Triumphant Entry compared to that of the Crucifixion. It is no news that the people that once applauded your great works are very seldom around to rescue you from going to the cross. In fact, it is not unusual for these persons to be on the other end of the spectrum demeaning your achievements and person. The actual death of Jesus which marks the climax of the tragedy may come in different forms to leaders ranging to character assassinations, persecutions and losses. However, this is inevitable at some points in the life of every leader or aspiring leader.
We celebrate Easter because Jesus rose from the dead. Indeed the darkest of nights must always give way to the rising of the sun. In spite of it all, one thing that we can always be assured of is the fact that if you are willing, there is a resurrection after the crucifixion. Your mindset is transformed in the resurrection and you will become a stronger and better person as a result. Jesus' ability to be true to His ministry and His calling gave birth to the Christian church as we know it today. Consequently, there are millions around the world that follow his teachings and practice. Hence, Jesus left behind a legacy that has spanned over centuries. Indeed, this was the crowning moment for the cross that He had to bear.
Triumphs and trials are a bittersweet mix in leadership. But one must always be mindful that the goals they are seeking to achieve and the eventual legacy that they will leave behind, ultimately supersedes any temporal challenge that one may face. After all no student is greater than his master/teacher and Jesus taught us all how to become great leaders.
Arinthia S. Komolafe is an attorney-at-law. Comments can be directed at firstname.lastname@example.org.
Super Value's offer to purchase the struggling five-store City Market chain is still the best deal, despite no official decision being made, according to Bahamas Supermarkets Limited (BSL) President Mark Finlayson.
Last week, Finlayson and Super Value owner Rupert Roberts confirmed that Super Value was seriously eyeing purchasing the five-store City Market chain.
During an interview yesterday, Finlayson told Guardian Business that there are other parties interested in purchasing the struggling food store chain, but admits that Super Value is the leading contender, though he remained tight-lipped about when a deal will be finalized.
Finlayson said the main reason he is favoring Super Value is because of the plan in place for the hundreds of City Market employees.
"There are others who are interested in purchasing the City Market food store chain, but the problem I have is that they are not willing to work with the employees the way that Mr. Roberts is willing to do. That's what makes his deal better than anyone else's," according to Finlayson.
The BSL chief pointed out that he has been in serious talks with Super Value's owner for just under two weeks.
"Mr. Roberts is a serious man and he is working diligently to get this deal done. We don't hope to recover anything from him. He is putting up enough money to pay the expenses," he added.
"At the end of the day, the employees will have a secure future with a very strong company and with that, I will feel like I have accomplished something. "
At this point, Finlayson said his focus is to sell off the store's assets as soon as possible and save jobs.
"We have tried our best but we have been unable to fix it (City Market). It has not succeeded. If the stores had succeeded, then my family and I would have benefitted from it but unfortunately we didn't."
In an interview with Guardian Business several months ago, Finlayson said the company was losing money, but he said the Finlayson family -- which acquired the company in late 2010 -- was determined to turn things around.
The Bahamas government's re-negotiation and cancellation of the 50/50 Mayaguana Joint Venture Agreement with the I-Group made little business and economic sense. It was short-sighted and damaging to the developers, the residents of Mayaguana and the people of The Bahamas, in broad macro-economic terms.
I have been involved in a professional capacity in joint venture business structures encompassing various legal and economic jurisdictions - the Middle East, North Africa, Europe and the Americas. Multimillion-dollar projects ranged from hotel development, consortium banks, barite distribution (drilling mud), to name a few. The JV structure allows both parties to share the burden of the project as well as the resulting profits. No one party can make all of the decisions for the development of the business alone. The former chairman of the Hotel Corporation, George Smith, recently outlined in The Nassau Guardian the highlights of the Bahamas government's 50/50 JV structure with the I -Group. To describe that transaction as anything different from a pure joint venture agreement is nonsense.
I applauded the PLP government at the time they inked the original transaction with the I-Group. To my knowledge, it represented the first time that a government of The Bahamas altered the traditional structures and approach of cementing foreign direct investment (FDI) for touristic development in the country. Traditionally, we extended concessions and land at favorable terms and hoped for the best. The Mayaguana JV was an innovative approach to broaden Bahamian participation in touristic development, shift the focus of economic activity and thus jobs to remote areas of the country and at last, to have an opportunity to share in the future profitability of project development.
Bahamians of all political stripes share my view that "big ideas" have to be adopted by our political leaders in the granting of concessions and land for touristic development.
In his provocative and timely book, 'Is It Really Better In The Bahamas... For Bahamians', Dr. Johnny Rodgers stated, "The time is now long overdue for our leaders to undergo a paradigm shift in their archaic, colonial mindset. Our government must insist on joint ventures when foreigners want to invest here. Just imagine if Atlantis was part of a joint venture."
Andrew Allen, in a December 2005 Tribune article opined, "It seems reasonable since Sands (Sir Stafford), to have expected his trade-off of land and licenses for jobs and investment to have matured and evolved where local authorities can have a more proactive and leadership role in touristic development".
FNM Carmichael candidate, Senator Darron Cash's "My Ten Cents" contribution in the March 30, 2012 Nassau Guardian issue, was "stronger emphasis on Bahamian ownership in tourism needed". Any perusal of Senator Cash's loan portfolio at BDB will tell him that to accomplish this involves more than simply advancing a businessperson in Betsy Bay, Mayaguana funds for a bed and breakfast boutique hotel. It would be doomed to failure unless complemented by a major investment in infrastructure and additional amenities to generate market demand; as envisioned in the Mayaguana 50/50 JV Bahamas government/I-Group structure.
The government's seeming ambivalence has hurt this project's success. The Prime Minister himself is on record as saying he had no confidence in the transaction, irrespective of the I-Group having sunk over $40 million at the time in a remote area of our Bahamas.
The current chairman of the Hotel Corporation, Michael Scott, was even more negatively subjective in his commentary on the JV, in which his language was silly, emotive and unprofessional. The country expects that the appointment of important public corporation directors is made as much for their business acumen and etiquette as their political loyalties. Its indicative of a degree of commercial naivete when leaders in government have little concern how their actions and commentary affect markets.
There have been no sensible business or economic arguments from the government for canceling the 50/50 JV structure in Mayaguana. Minister Vanderpool-Wallace whom I have great respect for raised the philosophical argument that the government should not be both partner and regulator.
That makes no sense in the light of the government's equity interest in the Arawak Cay Port and Heineken Brewery - two entities that both require strong government oversight.
Many of our rural island communities face extraordinary challenges in their efforts to significantly improve their economies in terms of personal incomes, job creation, average wages and strong tax bases.
The Mayaguana JV structure was the ideal vehicle to facilitate the expansion of a major economic development project of significant scale in the remote southern Bahamas. Anyone now trying to attract investors to Mayaguana from usually fickle capital sources will always be faced with the hurdle, "Why should I put my money, when the Government of The Bahamas walked away from an economically impactful project in their own back yard?"
Local investment advisor Ken Kerr exuded optimism in stating how it was a major confidence booster for investors to have the Government of The Bahamas as an equity player in the Arawak Cay Port. He was describing a project in the center of the city of Nassau.
It's even more crucial to have visible, strong government involvement, for investment markets to buy into putting money into the remote islands of The Bahamas.
There is no question that the Government of The Bahamas has missed a splendid opportunity to enhance economic development in rural Bahamas with the cancelation of the JV agreement with the I-Group. In spending an entire term in office to achieve relatively little with an amended agreement, they have sent the very chilling message to capital markets that if PM Ingraham is not the "daddy of the deal", the baby could end up on life support.
- Gary Christie
Friday 1st October 2010 8:00 PM
~Every Friday at Unwind Cafe~ Home of the B.B.B. - Bahamas Biggest Beer - Hosted by Mr. Champahne - Music by DJ Mystro FREE Admission before 8:00pm Start Time: October 1st at 9:30pm Where: Old Parliament Street Hotel, #20 Parliament St., DownTown For more parties, concerts and club events click here
I have a question for the people in the newsroom at the Broadcasting Corporation of The Bahamas. Why is it every time the Progressive Liberal Party (PLP) issues a press release or it holds a news conference you ensure that you solicit the response of the Free National Movement (FNM) to the press release or the news conference before you run the PLP's release? Normally if you did that it could be considered good journalism.
But pray tell why when the FNM issues a release or it holds a press conference there is never a PLP response issued at the same time? You cannot say it is because you could never get a response from the PLP right away, as I checked and was assured by the PLP that ZNS never calls to get an immediate response to a FNM press release.
People in the ZNS newsroom should be professional. They ought to follow the procedures required to be good journalists. They should never try to be politicians or react to what they think the politicians want.
ZNS be fair, be balanced and give all the parties equal air time when covering the political rallies. The Utilities Regulation and Competition Authority (URCA) should be monitoring; rest assured we are watching.
- Omar T.
Nassau, Bahamas - A
message from The Royal Bahamas Police Force - "Working together for a
safer Bahamas"in light of Easter Weekend:
The Easter Monday Holiday for many residents is a day for family activities which
include picnics at the beach, parties, sailing or cruising around the island and visiting family and friends.
would like to encourage residents that are planning activities at the
beach or at other public areas to be extremely vigilant. Pay close
attention to your surroundings and be alert to suspicious people,
activities and vehicles.
Over the years, I've been perhaps the staunchest critic of local politicians because of their seemingly nonchalant approach to the national sports program. In this space, the cry has gone out often for the national sports program to be elevated into the top budget allocations.
Something interesting and, quite frankly, unexpected happened the other day. The Progressive Liberal Party (PLP) made the decision to be the major sponsor to bring the performances of our track and field athletes home via radio and television, live, from the CARIFTA Games in Bermuda.
It was an innovative undertaking and a truly pleasant and well-received gesture. This is the height of the political campaign season as the official opposition PLP, the governing Free National Movement (FNM), the Democratic National Alliance (DNA) and independents posture their positions.
It could be a great political ploy by the PLP.
Only the opposition leader, Perry Christie, and the rest of the PLP brass can ever speak honestly about that aspect.
What's the bottom line here though?
The truth be told, this sports interest of the PLP is an encouraging sign. It makes one begin to believe that finally the politicians seem to be getting the message.
The PLP joined forces with JCN Channel 14 and Sports Radio 103.5 FM to take Bahamian television watchers and radio listeners close up to the competition in Bermuda.
It was enjoyable.
Hopefully this is a trend that will continue in the future. The political entities focus on many national issues. Thus far, particularly during this campaign spell, they had ignored sports. A political party taking the initiative to boost the national sports picture gives hope that central administrations will take heed.
The political parties spend huge amounts of dollars in attempts to get their messages out to the electorate. The electorate includes a large percentage of voters who are based within the country's sports fraternity. Helping sports will always be a plus.
I've had the occasion to lambast Christie and his party when in governance for not making good on the grand sports infrastructure promise for the Family Islands. It is only fair to give credit when it is due.
Certainly, the Bahamas Association of Athletic Associations (BAAA), parents and guardians of the 2012 CARIFTA team, the athletes themselves, their supporters and Bahamians in general had a high level of appreciation to be able to see sons and daughters of the soil representing the country.
It's one of those feel-good stories that politicians are rarely deservedly associated with.
This time, though, there ought to be nods of appreciation to the PLP.
It's beyond politics. It's more so satisfaction that politicians have stepped up to the plate to financially aid sports in a special way.
Let's see if the future brings continuity.
o To respond to this column, kindly contact Fred Sturrup at email@example.com.
At the center of the 2008 global crisis was the mortgage debacle. The U.S. government funded mortgage agencies that provided funding for residential mortgages, which in most cases, the mortgagee was not able to afford. The end results were foreclosures and a depressed housing market -- now headed into its fifth year.
As we all know, in the absence of a holistic economic plan The Bahamas continues to depend on the success -- or lack thereof -- of the U.S. economy. The Bahamas is now experiencing what the U.S. experienced back in 2008 in the mortgage market as a result of lenient lending practices. To fix the core of this problem we need policies that are realistic, achievable and measurable.
After reading the article "PLP to tackle mortgage 'crisis'" in Monday's Nassau Guardian, we felt compelled to provide some thoughtful analysis on the matter. We hold no political brief for any party, but as a financial research and investment company we have a professional and civic duty to opine on ideas which may impact our clients in particular or, as in this case, ideas which we think could adversely impact the Bahamian economy in the short and long term.
While the idea of providing relief for peoples having a difficult time meeting their mortgage obligations is arguably a good one, and one which we support, we have serious questions on some of the specifics outlined in the Progressive Liberal Party's (PLP) proposal as reported in The Guardian.
In order to place our argument in context, you may recall that our company argued against the loose monetary policy back in 2005-2006, when financial institutions and developers were very lax in their lending policies. We saw double digit credit growth and warned this would come back to haunt us in a very negative way. The loans default crisis (including mortgages) of which we spoke has arrived.
As regards the solution to the 'crisis' proposed by the PLP, there are several points that we support: the idea of extending "first time homeowners" stamp duty exemption to people who have lost their homes to foreclosure and are trying to purchase a new home; the argument for some form of review of finance charges and related fees; the regulation of "unregulated lenders"; and the proposal to, "bring under stricter control and supervision the system of salary deduction". We agree with the PLP that this is being abused by some lending institutions.
Concerns about the plan
Our greater concerns are related to the other recommendations in the proposal.
In a democracy it is not prudent for the government to mandate any financial institution to do anything. The shareholders, directors and management decide what course of action should be taken.
Governments and financial services regulators (central banks) sometimes resort to "moral suasion" in a credit crisis in order to try and persuade financial institutions to provide relief to mortgage payers. Alternatively, monetary policy initiatives by the Central Bank in the form of interest rate deductions are applied to solve the issue of mortgage delinquency.
That course of action, particularly with respect to our current predicament, is likely to be ineffective in and of itself. It is our view that a holistic plan is needed. A plan that will examine the likely outcomes and impact on all stakeholders in order to avoid unintended consequences.
By way of example, the recent reduction in prime rate caused serious issues for pensioners, insurance liabilities and National Insurance in terms of matching long term liability obligations.
While the government's debt obligations may have benefitted from the reductions, the real intended beneficiaries -- those who are already in significant arrears -- did not and will not benefit from the initiative. The unintended was the increase liability obligations by National Insurance, insurance companies and defined benefit pension plans.
What people need are jobs. Merely dropping interest rates or guaranteeing interest payments will not cause lenders to extend credit, especially since the creditworthiness of many borrowers was and still is slipping. In the case of new or revised loans at the lower rate, the average monthly benefit will not make much of a difference to the borrower.
The suggestion that a financial institution would simply write off 100 percent of the provisions is impractical at best.
Financial institutions are in business to return a profit to its shareholders. Further, the fact that these amounts are written off today does not preclude the financial institution from attempting to collect on the amounts written off sometime in the future when the circumstances of the borrower might have changed more favorably.
Provisioning for bad debts is an accounting requirement -- nothing more, nothing less. As regards the suggestion that the government would take a lien over the property, we do not see how this is possible given that the financial institution already has a lien over the property.
As for the government paying the interest of the delinquent mortgages, while this is a noble idea it is also not practicable and could encourage irresponsible future behavior.
Why would anyone who is current on their mortgage continue to pay if the government would step in and pay the interest for five years? This could have far-reaching consequences unless, of course, we have misunderstood this suggestion.
We are concerned about whether anyone attempted to do the math and cost-out the proposal to see if we, an already debt-laden country, could afford this ambitious proposal.
Has anyone given consideration to the moral hazard?
Let's see how much this will cost the people of The Bahamas.
Total Bahamas domestic credit was approximately $7.103 billion at the end of February. Loans or mortgages with maturity over 10 years stood at $4.639 billion. Mortgages outstanding was $3.090 billion with total private sector loans in arrears of $1.159 billion. Total mortgage arrears stood at $619.6 million.
Assuming the estimated proposed interest rate of 5.75 percent (again we do not know how the government proposed to do this in a capitalistic society, but accepting the proposal as is) this would translate into an additional annual commitment by the government of $35.63 million or $178.14 million over five years.
With what is essentially "free money" until 2017, those who are current on their mortgages would elect to stop paying since the government would be obliged to pay their interest until 2017. They would receive two benefits: a reduction from the average rates of 7.77 percent to 5.75 percent (an immediate savings of over two percent); and to have the government pay the interest until 2017.
It would be logical and indeed quite smart for everyone to stop paying their mortgages for the next five years and have the government pay on their behalf. This would translate into an annual cost of over $266.7 million per year in interest payments (more than the government's current debt service commitments) or $1.335 billion over five years.
All of this would further increase our debt to GDP ratio, which everyone is concerned about. What happens after 2017 if the economy does not turn around and continues to muddle through? We submit that given the current economic climate as well as the projected growth trajectory, it is highly unlikely that The Bahamas could afford this expenditure, unless we are able to grow the economy (provide more jobs) in the order of 10 percent per annum.
With reference to the suggestion that financial institutions extend maturity on the existing mortgages, as far as our research suggests, this is presently being done. With respect to using pension assets, again for the most part, this is being done already.
The reality however, is that less than 30 percent of companies in The Bahamas have a pension plan, so again, while a noble idea in the absence of pension legislation this will not result in any immediate assistance to the people it is intended for. Perhaps the idea of some form of mandatory pension may be considered to reduce the reliance on National Insurance in the future.
We again state, for the record, that this commentary is not politically motivated. We are simply interested in good economic policies which will further enhance the well-being of all citizens and permanent residents of The Bahamas. What we do not wish to see is capital being inadvertently driven away because of some ill-advised economic policy.
The Bahamas has any number of financial institutions which are ready, willing and able to provide advice on economic matters of national importance. This being one such matter, we felt compelled to present our views and to encourage political parties to consider stress testing some of their ideas that have been proposed so that we can navigate the future from an informed position.
CFAL is a sister company of The Nassau Guardian under the AF Holdings Ltd. umbrella. CFAL provides investment management, research, brokerage and pension services. For comments, please contact CFAL at: firstname.lastname@example.org.