Dear PLP, You Sure You Want This?
Nearly $10 billion dollars. That’s how much debt the Bahamian economy has incurred over the years, worsened by a devastating hurricane and a global pandemic.
The Bahamas’ total debt stands at 82.8 percent of GDP, according to the latest financial numbers.
That’s a scarily staggering figure, particularly for a country that has very little to no headroom for borrowing. In addition to that, The Bahamas is paying hundreds of millions of dollars annually to service its debt.
Revenue is down. Thousands of Bahamians are unemployed and The Bahamas has not rebounded from Hurricane Dorian, a storm that cost $2.5 billion in damages and $1 billion in lost government revenue.
And let’s not forget about the economic fallout caused by the Covid-19 pandemic. The Minnis administration spent more than $290 million grappling with the pandemic. That figure doesn’t even include the millions of dollars in lost tax revenue.
Earlier this year, the International Monetary Fund (IMF) projected that The Bahamas’ public debt would increase to nearly 90 percent of GDP by 2021 and remain more than 22 percentage points above its pre-pandemic level over the medium-term.
The Fund projected the following debt-to-GDP ratios in the coming years – 88.1 percent in 2022, 86.2 percent in 2023, 84.5 percent in 2024 and 82.8 percent in 2025.
So, basically, we will have to wait until 2024 to recover the economic value destroyed by the pandemic and return to pre-Covid-19 growth levels.
Yet, it is against this economic backdrop that the Progressive Liberal Party (PLP) wants to lead the nation.
As the Opposition sits in its war room devising plans to take over the country, it would do well really consider if this is what it really wants to inherit.
In politics, there’s always what we know now and what we find out later.
Remember when the Minnis administration assumed office in 2017? Then Finance Minister, K. Peter Turnquest lamented repeatedly about the financial situation the former Christie administration left the nation in and the fact that his government was constantly being asked to pay bills it had no idea even existed.
He said every week some new vendor was presenting bills to the government for payment.
Who knows what surprises could be in store for the PLP should it be victorious at the polls.
The PLP Will Have To Work Like Never Before
The PLP also needs to know that there will be no honeymoon period.
After being out of work for more than a year, many Bahamians are beyond eager to get back to work. They will expect immediate results and no excuses.
The hungrier the people are, the lower their tolerance level, even for a new administration.
Last week, the prime minister noted that The Bahamas’ rebound is contingent upon several things, like the restoration of the economies of our neighbouring countries and the government’s ability to contain and combat the pandemic locally.
There are parts of the world that seem to be slowly returning to some normalcy. But, many people, particularly those in North America, where The Bahamas gets the majority of its visitors, are still unemployed or experiencing financial hardship. Many simply cannot afford to travel.
Financial Secretary, Marlon Johnson believes an economic rebound from the pandemic will eliminate the need for new taxes. But, no one, and certainly not Johnson, knows just when that will be. Nor can anyone predict what will happen over the next few months.
For example, tomorrow marks the start of the Atlantic hurricane season. The National Oceanic and Atmospheric Administration (NOAA) has already predicted an “active” season.
If there’s a consolation it’s that forecasters say they don’t anticipate “the historic level of storm activity seen in 2020.” But, we all know forecasters don’t always get it right.
The Bahamas simply cannot handle another disaster, natural or otherwise. Hurricane Dorian took a serious economic toll on this country, the likes of which we have not recovered from. So, no one can speak with certainty about anything at this point.
Taxes Are Imminent
The PLP also needs to know that if it wins the election, it will be the one that has to break the news to the people about new taxes.
Given our current economic situation, I don’t see how any administration can avoid taxing the people. All of this borrowed money has to be repaid. So, it’s not a case of if we’ll be taxed, but when. There’s no avoiding that.
Despite The Bahamas’ enormous debt, the prime minister assured House members that the Bahamian dollar remains “as strong as it has ever been.”
He also claimed it would not come under any threat of devaluation – wait for it – “as long as this administration remains in office.” Just like a politician, isn’t it? Using scare tactics to remain in office.
The next administration – be in FNM, PLP or Democratic National Alliance – will certainly have its work cut out for it.
And the work will begin from day one.
Just a little something to consider.