Shadow Minister for Finance and Deputy Leader of the Free National Movement Peter Turnquest said yesterday that the potential Moody’s Investment Agency downgrade will cause “pain and suffering” for The Bahamas.
Mr. Turnquest, in an interview with the Bahama Journal, suggested that measures could have been established by the government to avoid this position.
He said the government promised that the implementation of value added tax revenue in 2015, would repay some of the national debt.
“Now we’re in a situation where our debt to GDP ratio has exceeded the danger level and is now standing in 76.3 per cent. That is unsustainable and will eventually lead to very significant issues if we don’t get it under control,” Mr. Turnquest said.
In Moody’s recent review, the credit agency warned that The Bahamas could face another downgrading that would put it just two notches above “junk” status.
Junk status means that the country would more than likely default on its debts.
Moody’s said the warning comes as the country continues to experience high unemployment, stagnant credit to the private sector and declining foreign investment among other things.
Turnquest added that the government over the last few years could’ve been more conservative in its spending.
“For the last several years, the government has in fact overestimated the revenue and understated the expenditure. This is an obvious inverse relationship that has resulted in an increase in debt year over year,” he said.
“This is a situation that has been going on for many years in successive governments where we have spent more than we’ve been collecting. We’re at the point now where we recognize we always have an issue and that we have to make some difficult choices to fix it,” he continued.
“It’s possible that we can have a further slowing of the economy as people sit out and wait out to see what the results are going to be from the reviews. That spells more suffering and pain for the Bahamian people because it means that jobs will not be created or business activity will not be created.
“We can move into a further period of depressed or negative growth which we can ill afford because obviously if we’re not growing we will not be able to afford the kind of employment requirements that have come due in June and the adequate revenues to meet all of the commitments that we have out there,” he said.
Meanwhile, FNM Leader Dr. Hubert Minnis also expressed his thoughts on the potential downgrade.
He said the government continues to push The Bahamas over a fiscal cliff.
“In March, this government was told to rein in its spending during the remaining months of the 2015-2016 fiscal year but they continued to spend like a drunken sailor. Yet to hear the Prime Minister tell it, everything is fine because he claims his government has reined in spending. What he did not tell the people is all of the ‘savings’ comes on the backs of hard working Bahamians through the PLP’s higher taxes and fees. Even with tax increases and higher fees they keep spending and putting The Bahamas financial standing at risk,” he said in a statement.
“But unfortunately for the people of The Bahamas this is nothing new. Year after year the PLP has failed to make significant, structural improvements in our budgeting and our economy keeps getting worse and worse. This is especially true for the Bahamian people but not for the PLP select few.
“Unfortunately, this Government proves everyday in their callous actions that you can’t fix a problem when you choose to ignore it. Our country’s outlook won’t improve until we have real leadership that shines a light on corruption and delivers real transparency. Leadership that will root out the crime that is infecting our communities, and leadership that will do the hard work to get our economy growing again. The Bahamian people deserve a government that will lead it to a more prosperous future, rather than a government that continues to run it into the ground. The FNM will provide real leadership for the Bahamian people that they desperately need and ought to have.”
