Leader of the Democratic National Alliance (DNA) Arinthia Komolafe yesterday expressed that the recent World Trade Organization (WTO) Impact Assessment reinforced the “widely held” concerns of Bahamians.
She said “In general terms, the Report did not reveal concerns that had not been expressed by the Democratic National Alliance (DNA) in our position paper on the WTO released in January of this year nor by diverse local commentators and observers albeit it did go into more details on the potential impact of WTO accession on the Bahamian economy.”
She added, “ high energy costs, inefficiency of government agencies, lack of enforcement of laws and a deficient governance system plagued with poor transparency and accountability have been highlighted for several years.”
She said that her party has declared on numerous occasions that accession to the WTO is not a cure-all for the numerous structural weaknesses in the country, and should not be the main incentive for long overdue reforms within the Bahamian economy.
She said, “ it is encouraging to see that Oxford Economics shares the same sentiments. The political will to engage in deliberate efforts aimed at reducing the cost of doing business and enhance the ability of local businesses to compete on a global stage should be the driver of positive change in our economy.”
“In its assessment of scenarios under which The Bahamas accedes to the WTO, Oxford Economics considered the potential impact on the national budget, balance of trade, Gross Domestic Product (GDP), taxation, unemployment and foreign direct investments among others. The key finding on the need for a more broad-based approach to structural reforms exposes the Achilles heel of the current administration which has adopted an ad-hoc and siloed approach to governance.”, she added.
Based on case studies, Mrs. Komolafe noted that little regard is given to the internal weaknesses of small and vulnerable jurisdictions during negotiations for accession into the organization.
She said, “the government should learn from these experiences. There has been no articulation of the revenue replacement measures planned and the effect of WTO accession on the aggressive fiscal consolidation plan.”
“Under a described scenario, the Report notes that the budget deficit could widen by 1 per cent or approximately $120 million dollars in 2021. After imposing a massive 60 per cent increase in Value Added Tax (VAT) on taxpayers, how does this fit into the plan to deliver a balanced budget within the stated timeframe?”
The report indicated that, annual GDP growth is projected to increase by 0.5 per cent to two per cent for a cumulative growth rate of approximately 5.6 per cent over ten years if a comprehensive approach to reforms is adopted.
She said, “an approach that is not holistic is expected to yield a 0.8 per cent GDP growth rate over a decade. It is apparent that both scenarios yield growth rates that significantly lag the 5 to 6 per cent required to absorb new entrants into the job market annually.”
She also noted that the report dispelled the misconception that the country’s accession into WTO will loosen its grip from international pressures on the country’s financial services industry.
She said, “the authors of the Report highlighted the need to rethink the value proposition of this vital industry as the DNA has recommended to the government on numerous occasions.”
She added, “simply put, there is a need to rethink, refocus, rebrand and reposition our financial services industry. In its conclusion, the Report tempers the often-exaggerated benefits of WTO accession by projecting that WTO accession will bring modest or limited gains for the Bahamian economy.”
