International credit rating agency Moody’s commentary blasting the Progressive Liberal Party (PLP) Government’s proposed mortgage plan may have been premature, according former State Minister for Finance and current advisor to the Ministry of Finance James Smith.

In an article that appeared in yesterday’s Tribune, Moody’s said the Christie-administration’s proposed plan demonstrates “a lack of commitment on the part of the administration to tackle annual fiscal deficits running at over four per cent of gross domestic product (GDP).

The plan is outlined in the PLP’s Charter for Governance, which was released during the recent election campaign.

However Mr. Smith, a former governor of the Central Bank said that the plan itself is not meant to be a “one-size fits all plan.”

“The plan itself cannot be implemented exactly as outlined in the PLP charter because a plan like that touches on many different players and I suspect that before you have a final plan you have to get all the stakeholders on board. No one plan can fit every single circumstance,” Mr. Smith said.

“Moody’s comments dealt with something that might be rather than something that is. The plan would first have to be approved by parliament and that calls for a debate. At this point you cannot say categorically how much it would or would not cost.”

Moody’s has charged that the government’s proposed mortgage relief plan would undermine efforts to reduce the country’s $4.4 billion debt and that the plan if implemented would cost Bahamian taxpayers around $250 million.
But Mr. Smith said the proposed plan should not be taken as a final draft or a done deal considering that there are procedures and regulations that have to be adhered to.
“Something like the proposed plan should not have been as detailed as it came out in the PLP’s charter,” he said.

“What needs to be recognised and stated is that there is a crisis in the housing market and the government intends to do something about it, which might include some kind of a mortgage relief. You shouldn’t go beyond that because it obviously would have been done without having the detailed analysis.”

He continued, “You need to look at the individual portfolios of each bank which differ – one size doesn’t fit all. Then you would have to know what the banks have done already in terms of making arrangements with their clients. And then you would have to talk to the regulators – the Central Bank to ensure that what you propose is consistent with their regulatory framework.”