The two main political parties are playing the blame game for past, and possible future, downgrades from ratings agencies. The exchange between the Free National Movement (FNM) and the Progressive Liberal Party (PLP) came after Moody's placed The Bahamas' Baa3 credit rating on review for downgrade.
Moody's noted that the government's 2017/2018 budget indicated that The Bahamas' fiscal outlook is "significantly worse than what we had previously incorporated into our projections".
"The Free National Movement's (FNM) published budget incorporates the baseline fiscal plans developed by the Progressive Liberal Party (PLP), including the expected fiscal effect of damage caused by Hurricane Matthew in October 2016," Moody's said.
"However, the FNM has also considered revenue underperformance and expenditure slippage under the PLP administration.
"Consequently, the new government now expects the deficit in fiscal 2017 to reach $500 million (5.5 percent of GDP). This contrasts with the PLP's mid-year performance report presented in March, which estimated a deficit of $350 million (3.8 percent of GDP), and an estimated deficit of $100 million (1.1 percent of GDP) in the original fiscal 2017 budget."
The new Minnis administration has had to borrow $722 million to cover the deficit from the last fiscal year, and what is projected this fiscal year.
The Christie administration was reckless with spending. But the problems faced by the government of The Bahamas and the country's deteriorating economy go beyond that.
In Moody's report the most significant line was in one of its charts. In 2013 the economy had zero growth; -0.5 percent in 2014; -1.7 percent in 2015; and 0.1 percent in 2016, which is essentially zero growth again. The economy is stuck in a stagnation-contraction phase. Investment is badly needed.
Growth is the way to lower our unemployment rate and to bring more money into the treasury for the government to meet its responsibilities.
Prime Minister Dr. Hubert Minnis must pursue a robust pro-growth agenda. He should keep taxes low and reduce the red tape holding businesses back. He should welcome all honest investment - be it local or foreign. The private sector creates wealth, leads trade. Government should retreat to the place of policymaker and regulator and allow entrepreneurs to take risk.
There is another major thing that needs to be done if we are to grow: the price of electricity must be reduced. No modern economy can thrive if individuals and businesses have to pay around 40 cents per kilowatt-hour. The average price of electricity in the United States is 10.41 cents per kilowatt-hour.
We need a new power plant and electrical infrastructure. Investors will move on and not consider The Bahamas with our high energy costs. Not to mention that the power goes on and off constantly, destroying appliances and equipment along the way.
We must grow. We will stop being downgraded when capital is flowing to and through these islands again and our economy is expanding. Every focus of government should be to incentivize investment and growth. The opposition should put forward its ideas, too. This effort requires contributions from all Bahamians who want to see better for our people.
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