A US State Department’s not so glowing report of the local investment climate has sparked the ire of the prime minister, who yesterday chided US officials for the “obvious mistakes” it has made.

In its most recent Investment Climate Statement, US officials found that while The Bahamas maintains a “relatively” stable environment for investment, in recent years, its competitive edge as an investment destination – relative to other small island developing countries in the region – has deteriorated.

The report noted that just last year, The Bahamas recorded less than half of the foreign direct investments (FDI) it attracted in 2011 has slipped in several important international investment climate rankings.

The lengthy statement also took note of the fact that the Progressive Liberal Party (PLP) returned to power in May 2012 amid ambitious campaign promises of economic and fiscal reform and that proposed initiatives included the creation of 10,000 new jobs, the implementation of a national mortgage bailout plan and the return of the majority shares in the national telecom company to state control.

But, those same officials determined that two years later, “many” of these campaign promises remain unfulfilled.
With a prepared statement on the issue, Prime Minister Perry Christie yesterday told reporters that while the annual statement is meant to present a factual, objective assessment of the country’s economic and fiscal situation, unfortunately some have been led to draw on specific points in the statement to present a negative tone with respect to the plan of action his government laid out in its Charter for Governance.

“It is simply inappropriate to look at a snapshot of the current situation and draw negative conclusions on the success of our plan,” he explained.

“We were abundantly clear in the Charter that, while our plan does offer numerous measures for short and medium-term relief, a responsible government cannot think only five years at a time. As such, we committed ourselves to a true national development plan (that) reflects a vision for The Bahamas of the future. We have been true to our word and we are pursuing just such a plan for the future.”

But, aside from chastising the government for not delivering on its campaign promises, the US’ report goes on to point out that it was the country’s sluggish implementation of reforms coupled with growing public debt, a narrow revenue base and heavy dependence on customs and property taxes that pushed international credit rating agency, Moody’s to conclude early this year that the prospects for growth in The Bahamas were limited.

Both Moody’s and Standard and Poor’s (S&P), the report noted, downgraded the country’s credit rating in 2013; an assessment the prime minister quickly corrected.

“In actual fact, Moody’s announced a downgrade in December 2012, but clearly stated that this reflected the worsening in the government’s balance sheet since 2007, largely on the basis of a low and inadequate revenue base,” he said.

“S&P did not downgrade our rating; rather they revised their outlook to negative in September 2012. Importantly, both agencies announced that our efforts at fiscal and tax reform, to restrain spending and broaden the tax base through the medium term, would be critical to underpinning and potentially improving the credit rating of our country.”

Mr. Christie also responded to the report’s assessment that The Bahamas’ “lackluster economic growth and continuing high unemployment have encouraged a shift the government’s policy towards an aggressive and coordinated pursuit of new foreign direct investment and renewed efforts to implement promised reforms.

“Already, we are seeing progress on the unemployment front, with the national rate of unemployment down to 15.4 per cent from its peak of 16.2 per cent,” he assured.

“We are also decidedly and firmly addressing the critical fiscal challenge that we inherited as we came to office. We are embarked on an ambitious and necessary medium-term plan to eliminate the government Deficit and reverse the growth of the debt burden. The international credit rating agencies have supported us as we move ahead with this plan.”

Further allaying any fears, the prime minister promised that there is a logical and fully articulated economic and fiscal plan for the remainder of his government’s mandate.

“Through our perseverance in the pursuit of this plan, I firmly believe that we are on the right track to much better days ahead,” he said.

“That will be the true measure of the success of our agenda for change.”