Former Governor of The Central Bank of the Bahamas, Julian Francis says three years is not enough time to achieve the balancing of the budget of the Bahamas.
Mr. Francis who appeared as a guest of the Radio and Television programme Jones and Company yesterday on Love 97 and JCN TV, said he believes that the imposition of new taxes and the increased Value Added Tax (VAT) will make it more difficult to balance the budget.
“I believe it will take a lot longer, even with a fairly aggressive austerity strategy. I wonder if it is a good idea to even try to do it in three years. I wonder if it would not have been better to target a more gradual time frame,” he said.
Mr. Francis noted, “ In the face of an economy that is already anemic, how do you seek to balance a budget? You can put the taxes on the books, but can you collect it? The more the economy contracts, the less you can extract money from it ”.
Mr. Francis who is Chairman of the Board of Commonwealth Brewery said, “ I take the Minister of Finance and the Prime Minister at their word that they are going to be the ones to correct this problem that we have been getting ourselves into for a long period of time.
“We have known over the years that either we have to address this at some point, or we find ourselves literally with an economy that no one takes seriously anymore.
“Evidently there will be some recognition on the part of the government of what external agencies are saying. To say that the International Monetary Fund (IMF) requirements are driving the government’s decisions, I don’t know if that is necessarily true,’ said Mr. Francis.
He said that the government should be commended for tackling the difficult fiscal issues.
“The growth of the economy would have been the preferred way. Every government sought to grow the economy over the years. Over the last ten years, on average we have been shrinking. The government now recognizes the problem. The question is how do we go about growth in the economy and how do we correct the mountain of debt. We are at the point where we can go no further.
“We have to wait and see if they have the right formula. Cleaning up the fiscal problem will be positive for the government and the economy, but in the short term, we may go through a rocky patch,” said the former Bank Governor.
