Former Finance Minister Sir William Allen believes both the former administration and the current one are to blame for the Moody's downgrade threat.
"For both sides, there is some blame to go around," Sir William told National Review.
"I think the main blame for this administration is perhaps that they, having put the facts out there -- they had to put it out there; they could not hide the extent of the deficit -- but having done that, perhaps a little more emphasis should have been placed on what they are willing to do to address that problem, to give some comfort to Moody's, to the ratings agencies. More effort should have been put on how they were going to address this problem."
In a statement released late last week, Moody's, the international credit ratings agency, said it is putting The Bahamas' credit rating on review for downgrade after learning from the Minnis administration that the country's fiscal position is weaker than previously estimated and that the government's debt ratios will continue to worsen over the coming years.
On May 31, the government introduced two resolutions to the House of Assembly to borrow a combined $722 million.
Asked whether he was astounded to learn the new administration intended to borrow so much right out the gate, Sir William, said, "I wasn't, quite frankly, because I knew a lot of spending was taking place."
In his budget communication in May, Deputy Prime Minister and Minister of Finance Peter Turnquest reported, "The fiscal situation in the current fiscal year is far bleaker than we could ever have imagined. Our predecessors have literally left us with a cupboard that is bare."
Opposition Leader Philip Brave Davis and Shadow Minister of Finance Chester Cooper both blamed the new administration for triggering the review due to its language and actions upon taking office.
"As feared, the Minnis administration has triggered a review of our sovereign credit rating from a major international agency due to the rhetoric of the budget debate," Cooper said.
"The Progressive Liberal Party warned that the world was listening as minister after minister in the new government painted a portrait of a doomed economy without a fiscal plan for the way forward, yet here we are."
Yesterday, we asked Sir William how the new administration could strike the right balance between informing the public about the state of public finances while avoiding a downgrade.
"That is a real dilemma," he said.
"It is a big challenge for the new administration, getting that right, because they have to be sure to put the blame where it has to fall -- on the people who went before who created the situation.
"They cannot allow this huge deficit to appear to be a problem of theirs. In other words, the Bahamian public has to understand that it is not them who created it.
"Now, the dilemma is, if they are too forceful in placing the blame, so to speak, it may indeed excite people like Moody's.
"It may excite those who are looking at the situation from the outside, and that's the real dilemma that they had. Whether they struck the right balance, that's difficult, because what Moody's appears to be saying now is precisely that you didn't strike the right balance."
While letting the public know they did not create the problem, members of the new administration ought not have been so vigorous that they would end up creating another problem, he said.
"If they are too vigorous in making that explanation, that may indeed excite the Moody's of this world, which indeed they may have done so," Sir William said.
We asked him whether Turnquest ought to have declared publicly that the cupboards are bare, as he did in May.
Sir William said, "I think they had to say the cupboard was bare."
But he added, "Perhaps they ought to have announced some things which would have softened that blow... but I imagine they had to say the cupboard was bare.
"There's no question about that, and the public had to understand that they met a bare [cupboard]. I think, though, and one might argue that they ought to have said some other things which would have softened that explanation or that disclosure for the benefit of the rating agencies."
We also asked Sir William how the Minnis administration ought to go about bailing us out of the fiscal mess we find ourselves in.
"If you're too vigorous in bailing us out of this mess, so to speak, the other impact you would have is on economic growth, and one of the things you want to ensure that you do now is to grow the economy," Sir William said.
"You can't be so vigorous in correcting the mess which they have left for us so as to erode any prospective growth.
"You have to realize growth. One of the most important things now that this administration has to achieve is economic growth. There's no question about it."
The Bahamian economy recorded no growth for most of the last term.
Turnquest revealed that the budget deficit was expected to be $500 million for the fiscal year just ended -- up from $100 million projected by the Christie administration.
He said at the time that the large deficit and the borrowing the government will have to undertake to meet existing financial commitments, more of which were being discovered daily, will significantly constrain the government.
But he said the Minnis administration was up to the task as prudent fiscal managers.
The new government has some convincing to do, however.
Moody's said it would downgrade The Bahamas' credit rating, "if our ratings review were to conclude that The Bahamas' government debt ratios were likely to rise to levels that would erode its fiscal strength".
However, the credit ratings agency noted that it would confirm the country's Baa3 rating if its review were to conclude that economic trends and the government's policy response "support a stabilization of the debt trend".
We asked Sir William whether he had seen any signals that the Minnis administration has a sound economic recovery plan.
He said, "I've not seen a plan, but I know that they (the new government) are conscious of that. I know that there's an understanding that, that is one of their urgent objectives. Economic growth is as urgent as fiscal management. They are very urgent objectives."
In opposition, Free National Movement Leader Dr. Hubert Minnis, the now prime minister, promised to appoint a council of economic advisers.
None has yet been announced.
Asked whether he was invited to be a part of such a council, Sir William, who turned 80 this year, said, "I've had my time. I don't want to be in the band; I want to watch it play on."
But he quickly added, "I may scream from the sidelines from time to time."

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