During the last budget debate the government announced it had to borrow $722 million to cover the shortfall from the last fiscal year, along with what's projected for this one. That's a lot of money for a small country such as The Bahamas. With a debt-to-GDP ratio in the 70-percent range, we are quickly using up the last bit of debt headroom before we face serious problems.
Government spending needs to be brought under control. We cannot borrow and spend our way to prosperity. That is the path to national bankruptcy.
The new prime minister realizes this. Dr. Hubert Minnis announced in his national address that his government will cut the expenditure of ministries by 10 percent, institute a hiring freeze and not renew contracts for emoluments exceeding $100,000 a year.
"Unlike the former head of government, I will be extraordinarily more vigilant in ensuring that my ministers adhere to their budgets and to financial constraints," said Minnis.
The Bahamas endured two rounds of downgrades in 2016.
Moody's downgraded the country's sovereign credit rating from Baa2 to Baa3 in August 2016.
The agency cited dismal economic growth, ballooning debt and the government's inability to meet its own projections as reasons for the downgrade.
In December 2016, Standard & Poor's downgraded The Bahamas' sovereign credit rating to sub investment-grade level, widely considered "junk status", in a grim economic report on the country's fiscal health.
S&P said the downgrade was a reflection of weaker-than-expected GDP growth.
Moody's now has the country's credit rating on review for downgrade. It said the review was prompted by statements from the Minnis administration that The Bahamas' fiscal position was weaker than previously estimated.
"The former administration took the ship of state and set it on a direct course for the iceberg of economic and financial ruin," Minnis said.
"The fact that we potentially face another downgrade is the result of five years of gross mismanagement and incompetence by the former administration."
High levels of borrowing, high taxes and significant government spending won't rescue The Bahamas from the cycle of stagnation and contraction. Growth is the way out. It would lower our unemployment rate and bring more money into the treasury for the government to meet its responsibilities.
Baha Mar is open. The government has pledged to fix the electricity situation in order to drive down costs and increase reliability. It is working on a solution to re-open the Grand Lucayan in Freeport. It has pledged less red tape for investors and incentives. All these measures and developments would help grow the economy.
The Bahamian people support a focused leader who wants to cut waste. The Christie administration went wild the last two years. Such reckless behavior can't continue.
From what has been revealed since the election it is clear that if Perry Christie were reelected prime minister he would have led The Bahamas to ruin. The Bahamian people were wise to send him to retirement. In doing so they saved the country.

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