Thursday, May 6, 2004

The Bahamas Government Ongoing Deficit Spending - Budget after Budget

The Bahamas Minister of State for Finance, James Smith on reducing the budget deficit: “What we must bear in mind in trying to reach deficit reduction targets is that it is not a one year exercise


Gov’t Facing Growing Deficit


06/05/2004


As the fiscal year winds to a close, government officials are working feverishly to bring a new budget to parliament at the end of this month.


It is too soon to tell whether the government will meet its revenue projection of $1.005 billion, but collections are expected to exceed the more than the $900 million collected in the 2002-2003 fiscal year, according to Minister of State for Finance James Smith.


“The deficit is likely to be a little larger than expected,” he told the Journal recently.


The 2003-2004 budget projects an overall funding shortfall of $122 million, which would raise government debt by 2.2 percent to 38.7 percent of GDP.


But Minister Smith has indicated that more than $30 million in unexpected expenditure will increase the deficit, unless the projected revenue is dramatically surpassed.


“As usual and without fail, you have the unexpected events that tend to throw it out of whack,” he said.  “Sometimes it’s favorable, most times it isn’t.  So the challenge is always there.”


The Minister added though that, “What we must bear in mind in trying to reach deficit reduction targets is that it is not a one year exercise.


“We try to do that over several years – three or four years as the case may be – because you really don’t want to choke real development.  If we have a run over the year over the projections that means that in framing the budget for the upcoming year, we take that into account and we might have to introduce revenue measures or additional expenditure controls or a combination of both.”


Prime Minister Perry Christie said Sunday while on the Radio Love 97 Programme “Jones and Company” that the government is “severely challenged” by the increasing expenditure and revenue collections.


But he reported that there were signs of improvements.


“We are very happy that we have now seen the beginnings of the turnaround in revenue,” Mr. Christie said.  “The last three months would suggest that the turnaround is setting in and that is headed toward obviously a better situation.  But even with that, we are going to be severely challenged given the kinds of developments that are taking place on our islands.”


On Wednesday, Minister Smith was unable to reveal specifics regarding collections.


The government is into its final weeks of preparing a new budget, facing a traditional rigidity in expenditure.


Minister Smith has pointed to the difficulties in preparing a budget when such a large portion of expenditure is fixed.  It is a situation he said is not easy to restructure.


“I think it’s going to be very difficult because 55 percent or thereabouts are salaries and wages and it’s a very difficult political decision to reduce the size of the public service, so you almost take the wages and salaries as a given,” he noted.


“Added to that would be another fixture of the budget, debt servicing, and that’s about another 18 percent of your budget.  So already you’re talking about 75 percent of your budget that’s fixed.  No matter how hard you try, unless we were to have some dramatic structural change in the economy, I don’t see that happening.  I know of it happening in no economy in the world, really.”


One way of beginning the reversal of this trend is making conditions conducive to the growth of the private sector, he said.


“If you create the jobs in the private sector then there is likely to be a drain from the public sector into the private sector,” Minister Smith pointed out.

Tuesday, May 4, 2004

FNM 2007

FNM Launches “Restoration 2007”




Claiming that all the new jobs created since May 2002 were created by the Free National Movement, party leader Tommy Turnquest did what was expected last night – he slammed the performance of the Christie Administration, while again declaring it a “do nothing government.”


“The PLP is a government of show without substance,” said Mr. Turnquest, who brought the keynote address at a rally at the R. M. Bailey Park where he launched a campaign dubbed “Restoration 2007”.


“Let them know that thousands of Bahamians who get swing last time will pay the PLP back next election for their lies and empty promises,” he said.


The rally came one day after the Progressive Liberal Party Government observed its second anniversary in office, with Prime Minister Perry Christie declaring that he and his team remain on course.


Mr. Turnquest spent much of the time accusing the PLP of taking credit for the work he said was done by the Ingraham Administration.


Pointing to a number of resort developments on the Family Islands, including the much talked about Emerald Bay project in Exuma, Mr. Turnquest said the PLP “didn’t do anything to make any of that happen, just like they didn’t do anything to make Phase III of Atlantis happen.”


“All that was planned and approved by the FNM,” he said.  “The FNM built or caused all of them to be built.”


In recent weeks, the government has been boasting about its housing record, saying that the PLP built nearly 600 houses in two years, compared to the fewer than 800 houses built by the FNM in nearly 10 years.  But Mr. Turnquest sought to set the record straight.


“The PLP is building houses in existing subdivisions, many of which were planned and created by the FNM,” he said.  “They are building without building permits and are not providing parks, or open spaces or commercial areas like the FNM did.”


Free National Movement Chairman Carl Bethel, meanwhile, said the government fell far short of its projection for the rate of growth of the Bahamian economy last year.


“Despite the government’s promise of 2.5 percent economy growth for the last budget year, the latest figures from the IMF show that the Bahamian economy last year grew by 0.9 percent,” Mr. Bethel said.


During his budget communication last May, the prime minister actually said that the International Monetary Fund projected real economic growth of the Bahamian economy of 2.9 percent its April 2003 World Economic Report.


Mr. Bethel claimed last night that, “Last year, under the PLP The Bahamas had the worst economic performance of any comparable country in the Caribbean.”


He also claimed that the level of Net Foreign Investment in the Bahamian economy fell from $400 million left by the FNM in 2002, to only $200 million.


Mr. Bethel again attacked the quality of governance in the country, saying that under the PLP the country is beset by “bad government and laziness.”


“There is no money in the Treasury, and while the government is racking up a record-breaking budget deficit this year, the people who could have paid good money to ease that pressure have been giving a whopping tax cut,” he charged.


Mr. Bethel said certain real property exemptions granted under the PLP Administration will provide significant benefits for wealthy persons like those who live in the exclusive Lyford Cay community.


But on Sunday, while appearing as a guest on the Love 97 Programme “Jones and Company” Prime Minister Christie pointed to real property tax cuts as initiatives that have benefited Bahamians who need them most.


“We have given all first-home buyers exemptions from stamp duty on their homes up to $250,000,” Mr. Christie pointed out.  “We have eliminated real property tax for Bahamians up to $250,000…This has all proven already to have a direct positive impact.”


At the rally, Mr. Bethel also slammed the PLP on national security issues.


“The Police Force and the Defence Force are demoralized and unhappy,” he claimed.  “They are under-funded, under-equipped, under-staffed and under-paid.  The government does not seem to have any plan or strategic vision to develop and improve our armed and security services.”


He vowed that “when this one-term government is run out of office the FNM will aggressively grow the economy; attract real foreign investment, stimulate increased Bahamian investment and ownership in the economy, create jobs and empower Bahamians.”

Monday, May 3, 2004

New PLP Senator Chosen to Replace Edison Key

Edison Key, who resigned from the upper chamber months ago - criticized Prime Minister Perry Christie for "poor leadership" and "lack of direction." 



PM Chooses New Senator


Nassau, The Bahamas

03/05/2004

 

 

Prime Minister Perry Christie says he has chosen a new senator to replace Edison Key, who resigned from the upper chamber months ago, criticizing the nation's leader for "poor leadership" and "lack of direction."


Mr. Christie made the revelation while a guest on the Radio Love 97 Programme "Jones and Company" Sunday, on a day when the party observed the second anniversary since winning the government in 1992.


But the prime minister did not reveal his choice to fill the seat left vacant in the upper chamber.


"I've made a decision on it," said Mr. Christie, who was responding to a question asked by the show's host, Wendall Jones.  "I can assure you…the announcement will come shortly."


Mr. Key said he resigned on January 10, but the prime minister said he did not become aware of the so-called resignation until he received Mr. Key's letter more than five weeks later after the Journal made public the Abaco senator's surprising move.


Mr. Christie said he did not rush to replace Mr. Key because the former senator's absence from the senate did not create any disruptions or interruptions.


"I have the luxury of also deciding whether or not I make another major decision which will impact the development of this country with respect to the senate as well," he said, although not going into further details.


The senate has met several times since Mr. Key's resignation, dealing with several key pieces of proposed legislation.


When he spoke with the Journal in mid February about his resignation, Mr. Key said he thought the senate was useless.  But a number of his former colleagues have disagreed with him.


Opposition senators, meanwhile, including Free National Movement Leader Tommy Turnquest, have criticized Mr. Christie's delay in appointing a senator.  Mr. Turnquest said the delay was indicative of the way the Christie Administration operates.


On Sunday, Mr. Christie said, "Please forgive me. I take full responsibility for the delay."

Ambassador Newry Likely To Be Re-Assigned

By Candia Dames


03/05/2004



Bahamian Ambassador to Haiti Dr. Eugene Newry may be re-assigned, according to Prime Minister Perry Christie, who was a guest on the Radio Love 97 Programme "Jones and Company" Sunday.


 

"I believe personally that this is a good time to re-assign him," Mr. Christie said.


 

"I have offered the full services of my government in ensuring that if it is his desire, we will do so, failing which, I have asked the Foreign Minister to give specific consideration to servicing Haiti as a non-resident embassy."


 

Dr. Newry returned home on April 18, one day after his wife, Francoise, and her security aide, were shot and slightly injured during an armed robbery at a market in Port-au-Prince a day earlier.


 

The shooting left many people wondering about the safety of Bahamian personnel in the Western Hemisphere's poorest nation, although government officials said they were satisfied that the incident was not an attack on Bahamian interests in Haiti.


 

Mr. Christie indicated that the Americans, Canadians and the French have asked the government not to close its embassy in Haiti because they value Dr. Newry's participation.


 

"They saw real value in his knowledge and feeling for Haiti," the prime minister said.


 

He said, "It is Dr. Newry's choice. We gave him an assignment. We withdrew him because of concern about his safety and the safety of his family and the other embassy staff there.   I've had a very long discussion with Dr. Newry. I have expressed to him that I value his services and he knows that I am prepared to re-assign him. I have great respect for him."


 

The prime minister was also asked by the show's host, Wendall Jones, to comment on a decision made last week by the United States to pull out of a high-level crime and security meeting with Caribbean representatives that was set for The Bahamas this week.


 

Mr. Christie admitted that the U.S. put off the meeting due to CARICOM's unwillingness to allow any official of Haiti's interim regime to attend.   Caribbean leaders plan to discuss whether to officially recognize the government that replaced ousted President Jean Bertrand Aristide when they meet in July.


 

"The Bahamas has not compromised its relationship with America," the prime minister said.   "America understands that The Bahamas has not compromised its relationship with America and when Mrs. Newry was hurt recently in Port-au-Prince, not only were the Americans and Canadians offering safe passage to us, but we were in open communication with them."


 

He said no prime minister of the region disagrees with the Americans in their view that Haiti should play a full role in CARICOM.


 

"But there has to be a process," Mr. Christie said. "We had hoped that Mr. [Gr´ard] Latortue, the prime minister of Haiti, would have withdrawn his publicly-stated remarks that he was going to suspend relations with CARICOM, freeze relations with Jamaica.


 

"His letter coming into us, came at the end of our conference and so we said very clearly when prime ministers meet in July we now have the basis to re-examine Haiti's position and then make a decision on whether Haiti will sit.   All of that happened with our informing the Americans."


 

Mr. Christie also said, "I told the Americans that it was the intention of the prime minister of Jamaica and the intention of the prime minister of The Bahamas to meet with President Aristide and to discuss his future and very clearly to impress upon our colleague that his future must change, that the plans for President of Haiti under all circumstances must change."

Prime Minister Perry Christie Says No To Cabinet Shuffle

Christie said he disagreed with the notion that making changes to his Cabinet was a must because it is a sign of good governance



No Cabinet Reshuffle


03/05/2004




Saying that he does not want to disrupt major projects underway in various ministries, Prime Minister Perry Christie has shelved plans to make "adjustments" to his Cabinet.

"I have to have a real purpose for changing because the results are important," said Mr. Christie, who was a guest on the Radio Love 97 Programme "Jones and Company" which aired Sunday.

He said he disagreed with the notion that making changes to his Cabinet was a must because it is a sign of good governance.

Rumors regarding the prime minister's planned Cabinet reshuffle have been rife over the past several weeks, with Mr. Christie indicating to the Journal at the beginning of the year that he planned to make changes to his team.

At the time, he said, "The prime minister must always examine his government with a view to making adjustments and most certainly I am looking at making adjustments."

But on the Sunday programme, Mr. Christie revealed a change of heart.

He explained that he did not want to draw attention to a small number of ministers and ministries by making one or two changes.

"So as not to put undue pressure on one or two ministries by making adjustments, I decided to wait for a certain process to complete itself," the prime minister said.

He indicated that he is generally pleased with the job being done by his ministers, pointing to several examples.

"I realized that in tourism, for example, I had a minister in the middle of new marketing programmes that have resulted, that will continue to result in, an improvement of [the industry]," the prime minister said.

He added that if he were to make changes to the portfolio of Works and Utilities Minister Bradley Roberts, it could further delay the New Providence road improvement programme many people are anxious to see start and finish.

Pointing to Labour and Immigration Minister Vincent Peet, Mr. Christie said in considering whether to make adjustments, he realized that, "I had a Minister of Labour who had proven to be acceptable on the part of and had credibility with labour unions."

In addition, he pointed to what he indicated was a fine job being done by Minister of Housing and National Insurance Shane Gibson.

"I had a Minister of Housing who, in 22 months had build 558 houses, [compared to the former government] that built in ten years 780 houses," Mr. Christie said.  "So I had a minister who was functioning efficiently."

In recent weeks, government officials have been pointing to their record on building houses, as an example of what they say is significant progress being made by the administration.

In the case of Transport and Aviation Minister Glenys Hanna Martin, Mr. Christie said it would be difficult to change her right now, given that she is working to meet a crucial international July deadline for the upgrade of port security throughout the country.

He also said that it would be unwise to reassign Youth, Sports and Culture Neville Wisdom who is working on very important youth projects, including the implementation of a National Youth Service.

Mr. Christie said, "I had to take stock of what I call the complex nature of governance and judge what I do by the results I hope to achieve and the results I hope to achieve will be attainable if I delayed what I intended to do."

Thursday, April 29, 2004

The welfare and betterment of The Bahamas remain my obsession - my only obsession, says former Prime Minister, Hubert Ingraham

Will Hubert Ingraham return?



WHEN INGRAHAM SPEAKS PEOPLE LISTEN


STRAIGHT UP TALK

APRIL 29TH, 2004


“I conclude by saying that notwithstanding my hiatus from active politics, I have no less interest nor concern for Freeport, Grand Bahama, for Abaco, New Providence or any other island in our country, than I did when I was in office as Prime Minister.  The welfare and betterment of The Bahamas remains my obsession, my only obsession.  And so I say, so long as those who are in, advance The Bahamas and all its people, people like me, who are out, will be comfortable with our station in life.  I say no more today.”

With those few parting words during his remarks at the recent Grand Bahama Association of Administrative Professionals, former Prime Minister Hubert Ingraham ignited debate about a possible return to the leadership of the FNM.  Indeed, one of the most intriguing questions in this country today is: Will Ingraham return?

Like him or not, Mr. Ingraham’s political presence in our society is undeniable.  Perhaps only Sir Lynden commanded a more imposing presence.  The Right Hon. Hubert A. Ingraham is a gifted leader and an astute politician.  Creating intrigue about himself comes easy.  What he wanted to say in Freeport he said and what he wanted to achieve he achieved.  He wanted people to hear what he said and they did.  He knew people would talk about what he said and they are.  There are many politicians in our country, high and low, who covet such a skill.

Some leaders are merely shooting the breeze, hoping that someone would help them deliver.  That has not been true of Hubert Ingraham, he was a doer, an achiever.  He not only “says what he means and means what he said”, he knows what he wants to achieve and focuses on getting it done.  This is a rare quality in Bahamian political leaders these days.

Asked about Mr. Ingraham’s remarks, Sen. The Hon. Tommy Turnquest, leader of the FNM, said that he was comfortable with Mr. Ingraham as his predecessor, a sitting MP and a retired Prime Minister.  Interesting!  This much is certain, Sen. Turnquest ought to have no worries about anyone contesting for his position in the party; indeed he should expect and welcome it.  Only a stagnant organization lacks multiple contenders for its top post.

Additionally, Sen. Turnquest, as he rightly pointed out, must remain focused on his agenda, which is to imbue the confidence of those he leads and those he seeks to lead.  Succeed or fail at this, he has no other charge.  In the end, the arbiters of his faith will not be his contenders but those to whom he makes his case for leadership.

Interestingly, Prime Minister The Right Hon. Perry Christie has not commented on Mr. Ingraham’s remarks on this occasion as he did on the last occasion Mr. Ingraham spoke in Freeport.  Perhaps the PM wants to let sleeping dogs lie.

Don’t be mistaken, however, PM Christie hears every word Mr. Ingraham says publicly - perhaps even some of what he says privately.  And he takes them all seriously!  The message to PM Christie from Mr. Ingraham was clear, “Be productive and work for all the people and I will have no motivation to come after you.”  For a competent leader, this would be a small challenge.  However, given Mr. Christie’s performance to date, as assessed by many Bahamians, Mr. Ingraham might just be brushing off his political hat for an imminent return.

Frankly, this columnist does not believe that Mr. Ingraham wants to return to leadership.  However, if the circumstances are mitigating enough he could be persuaded to do so.  Who should worry about this?  Not anyone with true leadership ability because if they cannot persuade others to choose them above Mr. Ingraham, they may not be the best person to lead.  After all the leader is the one people choose to follow and not the one they have to follow because there is no one else.

Are there other people in this nation, in the FNM capable of leading, as Mr. Ingraham did?  Yes.  However, they must make that case to the people who matter, even if they must do so in a head on contest with Mr. Ingraham.  Indeed a competitive but respectful bid for leadership between strong contenders breeds life into an organization and energizes its people.  Perhaps leaders in The Bahamas have become too accustomed to coronations.

It is no wonder that so many of them come to expect, yea even demand unbridled submission to their will.  Leaders should contend for and continue to justify their leadership.  This challenges them to be productive and accountable, both necessary for effective service to people.


WHEN THE PM IS FRUSTRATED HE INSULTS HIS PEOPLE


I would not refer to the Prime Minister as a silly man.  That would be rude and arrogant.  By the same token, Prime Minister Christie should not refer to his people or their thoughts as “silly”, whether he accepts them as legitimate or not.  Frankly, PM Christie’s remarks in this regard seem rather arrogant.  Either this or they are a sign of immense frustration, perhaps even overwhelming pressure.

The Christie administration is not a “do nothing government”.  Rather, it is more of a do nothing new, fresh, impacting or promised government.  And, it is a do things that are unflattering for a government to do, such as renting foreign bleachers for Junkanoo, allowing Korean Boats to enter the country under scandalous circumstances, so mistreating one of its own senior senators that he was forced to resign and leave the party, allowing a cabinet minister to rent from a government agency under a charge of conflict of interest, producing embarrassment for the country with the poor handling of the Haitian crisis situation, allowing a shameful feud at BAIC involving senior members of the government, allowing a sitting MP to come into utter disrepute through a declaration of bankruptcy by the courts, causing a major investor to pull out of a proposal due to indecisiveness, and the list goes on.

It must be terribly frustrating for the Prime Minister to have promised the world to Bahamians and to deliver, if anything, a village, at least as far as many Bahamians are concerned.  It must be even more frustrating that his supporters are criticizing him as harshly as his detractors.  If he were wise, PM Christie would avoid being defensive and insulting, referring to his own people as “silly” and their concerns as “silly distractions”.  If he were wise, he would listen and make prudent changes in the way he does things.  After all, the final arbiters of his success as leader are the people.  Public relations will not help him if what he needs to do is change, especially if rather than change he resorts to denigrating those he serves and who express concerns about the way he is serving.  This is a sign of weak leadership.

The fact is that the PM’s critics come in all shapes, colours, sizes, creed, ethnicities, nationalities, political persuasions and socio-economic backgrounds.  Of course, the PM knows this; this is why he and his party have launched a public relations campaign to tell people what they believe they have done.  If they thought that only opposition members were criticizing them, they would see no need to do this.  However, many PLP supporters are as adamant as persons opposite that the Christie administration has not performed up to par.  To change this, the administration must change, either change itself or be changed.  Period!

Monday, April 26, 2004

A Move to Overhaul The Bahamas Tax Structure

The Bahamas Government has engaged the services of two of the foremost Value Added Tax (VAT) experts of the Crown Agents group


Bahamas Tax System Under Review


Nassau, The Bahamas

26/04/2004



In its most tangible move yet to begin the process of overhauling the country's tax structure, the government has hired a U.K-based consultancy firm to review the present system and make recommendations for change.


"We've [made] good progress," Minister of State for Finance James Smith told the Journal.


He said the government has engaged the services of two of the foremost Value Added Tax (VAT) experts who are a part of the Crown Agents group.


Minister Smith said that once this study is completed, the government will make a determination on the way forward.


"The whole idea is to look at this new tax regime [to determine] if it's something we really want to do," he added.  "If we were to change from one to the other, do we do so immediately?  Do we do so over time?"


VAT is a form of indirect tax applied to goods and services that increases the prices of those goods and services.


Minister Smith noted that, "We can have an efficient tax regime which would benefit the government from the point of view of increased revenues, the public from lower prices and the businesses by releasing them from tying up funds in inventory."


For quite some time, government officials, economists and others in the private sector have been pointing to the need to overhaul the system of taxation in The Bahamas, given that various pending international trade agreements require discriminatory border taxes to be abolished.


The need exists for The Bahamas to depend less on customs duties, Minister Smith has said repeatedly, while pointing to the enormous challenges involved in instituting a new system.


"We are engaging the international trade, the [Free Trade Area of The Americas], the [World Trade Organization] and even looking at the [Caribbean Single Market and Economy] and for all international trade agreements, they start off with asking you to roll back tariff rates because tariffs are generally regarded as restraints to trade," Minister Smith said.


"But for us more importantly the bulk of our revenue comes from import duties and they are very distortionary in the sense that they are what the economists would call regressive.  They're applied in such a way that the lower income households bare the brunt of the tax because it's essentially a consumption tax."


He said the government is working on tax overhaul "quite earnestly."


"If we decide to go forward, clearly I would have to get the green light from the government and I would have to discuss with the wider community the way forward," he said.  "We've still got some things to do. Suffice it to say, it is in the pipeline."