Leadenhall Bank and Trust Company Limited Licence Suspended

Craig A. Gomez has been appointed as receiver of Leadenhall Bank and Trust Company Limited, and is authorized to assume control of Leadenhall’s affairs in the interest of its creditors - and to exercise all the powers of a receiver under the Companies Act, 1992 

Bank Licence Suspended

 

By Candia Dames

Nassau, The Bahamas

19th July 2005

 

 

 

 

The Central Bank of The Bahamas announced late yesterday that it has suspended the bank and trust licence of Leadenhall Bank and Trust Company Limited to protect the interests of depositors of the bank.

In addition, Craig A. Gomez has been appointed as receiver of the bank and is authorized to assume control of Leadenhall’s affairs in the interest of its creditors and to exercise all the powers of a receiver under the Companies Act, 1992.

The Central Bank did not go into specifics regarding why it took this action.

But Leadenhall in recent years has been plagued with legal troubles.

In 2003, federal authorities in the United States filed petitions in seven federal courts in an attempt to secure the records from MasterCard accounts at Leadenhall.

The U.S. government has been targeting persons it believes used credit and debit cards issued by offshore banks to hide income from U.S. tax collectors.

The Internal Revenue Service has already announced that more than 1,200 people have admitted that they used offshore accounts or credit cards to avoid paying over $100 million in taxes.

U.S. authorities believe these cards allowed tax evaders and fraudsters to access their offshore funds by using the card in the United States for cash withdrawals and purchases.

In 2004, a New York doctor pleaded guilty to money laundering charges.  It is alleged that he ran more than $200,000 of taxable income through Leadenhall accounts and other accounts.

Earlier that year, Leadenhall had been thrust at the centre of a major fraud case in which a U.S court appointed receiver had been seeking to recover millions of dollars allegedly owed to creditors and investors in an elaborate scheme involving the channeling of funds into Bahamas-based accounts.

Leadenhall Bank provided credit card and other financial services to residents in the United States and provided a broad array of services to and engaged in nefarious activities with an entity in the Cayman Islands called Morningstar Ltd., a suit had alleged.

The Bahamian bank was also the partner of AXXESS INTERNATIONAL, which provided credit and debit card services around the world.

Liquidators and receivers had been seeking to hold Leadenhall and AXXESS INTERNATIONAL accountable for being a part of "a conspiracy to defraud."

It was alleged that the U.S-based operators of a business enterprise called "Cash 4 Titles" developed a multi tier marketing enterprise, which eventually involved the use of the Cayman Islands, Bahamas and United States entities - and individuals in a joint venture to defraud investors in the scheme.

It was further alleged that between 1993 and December 1994, the Cash 4 Titles made loans of up to $1,000 to consumers with poor credit histories, and charged interest rates as high as 25 percent per month.

Liquidators at the time had insisted that certain clients were being bilked in the process.  It was a claim William Jenings, managing director of Leadenhall, had dismissed as "totally spurious".

Executives of The Bahamas-based bank could not be reached last night to respond to the Central Bank’s decision to suspend their licence.

The Central Bank announced that the suspension became effective yesterday and will last for a period of 90 days or such shorter period as shall be determined.

In the past, the Central Bank has taken action to suspend a bank’s licence before revoking it, but there has been no indication that that will be the case in this particular instance.

The Government of The Bahamas has been fighting to avoid the kind of publicity that has surrounding certain alleged transactions of Leadenhall, seeking to protect the reputation of The Bahamas as a well-regulated financial services jurisdiction with a zero tolerance approach to money laundering and other financial crimes.

It’s why the parliament of The Bahamas passed a controversial package of financial bills in 2000 after being blacklisted by the Financial Action Task Force.

Caricom Accepts The Bahamas' Position On CSME

Caricom Accepts Bahamas' Position On CSME

By Candia Dames

candiadames@hotmail.com

Nassau, The Bahamas

8th July 2005

Leaders of the Caribbean Community have accepted the position The Bahamas has taken not to sign onto the Caricom Single Market and Economy (CSME) within the next two years and have agreed that this country will continue to play an active role in the regional grouping.

The Bahamas reported on the state of the public debate regarding the Revised Treaty of Chaguaramas, which establishes the CSME, according to a communique`, issued yesterday following the 26th meeting of the Conference of Heads of Government of the Caribbean Community.

"Member states agreed that in the circumstances of the particular position of The Bahamas, the status quo of its present relationship and involvement in Caricom institutions should be maintained," the communique` also said.

When he had been pushing the case for The Bahamas to join the CSME with certain reservations, Minister of Foreign Affairs Fred Mitchell had insisted that the signing would have maintained the status quo as it relates to The Bahamas' participation in Caricom.

He told The Associated Press in St. Lucia that the debate in The Bahamas over CSME has effectively ended because of the decision taken by the Government of The Bahamas not to sign the Revised Treaty.

It was also something Minister Mitchell reiterated when he spoke with The Bahama Journal yesterday.

"I really don't propose to get into any further debate about this matter," he said.  "It is not an issue which is a live issue for The Bahamas government.  The Bahamian people said they want no further debate on the matter so the debate is over and I won't engage in it."

During the debate, there had been questions regarding what role the country would play in Caricom if it did not sign onto CSME.

Bahamas High Commissioner to Caricom A. Leonard Archer had even suggested at one point that The Bahamas may in fact have to resign from the bloc.  But he had said that that would have depended on the reaction of the heads to this country's decision not to join CSME.

Heads of Government indicated that they understood why the country could not now join the agreement.

According to the communique`, the heads welcomed the fast-track steps taken by Barbados, Jamaica and Trinidad and Tobago to become Single Market compliant since March 2005, and took note of the "strenuous efforts" being made by all the remaining member states to achieve Single Market treaty-compliance and overall readiness.

"They reflected the constraints which member states faced and the challenges of accelerated integration among states of differing capabilities and competitive strengths, and reaffirmed their commitment to the long-held community principle of special- and differential treatment for the disadvantaged among the member states," the communique` added.

Even though the government has stressed repeatedly that it had planned to secure certain reservations, including the free movement of people, there continued to be widespread fears that The Bahamas would have been flooded with foreign nationals had it signed the agreement.

These kinds of "misconceptions" as they were termed by Minister Mitchell were a part of the reason why the drive to CSME was abandoned.

However, heads addressed the free movement of skilled nationals during this week's summit.

They agreed that Caricom nationals who are entering the Free Movement Regime with a skills certificate issued by a member state other than the receiving state should be allowed to work immediately while their qualifications are verified by the receiving state.

The conference also agreed that the review of proposals for the expansion of the eligible categories of skilled nationals would be completed in time for consideration at the next meeting of the conference.

There were other matters of importance addressed in the final document from the heads meeting.

Regional leaders reviewed developments in the various external trade negotiations in which the region is involved.

"They noted that the rapidly changing international environment was less accommodating of preferential arrangements, such as those that traditionally characterized the region's trade relations," the communique` noted.

"They reiterated the region's commitment to, and active participation in ongoing external trade negotiations, but observed that the current challenges including tardy progress on special and differential treatment for small, vulnerable economies and the general push for reciprocity were beginning to raise uncertainty about the costs and the benefits involved."

Heads also noted that St. Vincent and the Grenadines now joins Suriname, the first member state to issue national passports using the common Caricom format.

Several other member states are expected to introduce the new passport format in 2005 and 2006.  December 2007 has been identified as the timeframe for completing the introduction of the new passport format by all member states.

When he returned from the summit yesterday, Minister Mitchell indicated that this is not a concern for The Bahamas, as it does not intend to follow this same move.

During the summit, heads of government also received a presentation on developments relating to security in the region, according to the communique', which says it was recognized that the issue of security needed to be frontally addressed and effectively tackled in order to maintain sustainable development.

In this regard, they endorsed the Management Framework for Crime and Security, which makes provision for a Council of Ministers responsible for National Security and Law Enforcement to superintend policy direction; a Security Policy Advisory Committee; and an Implementation Agency for Crime and Security.

Mixed Reviews In The Bahamas on PetroCaribe initiative

The concerning consensus is that more consultation is needed between the government, the three major oil companies, and retailers in The Bahamas on the PetroCaribe agreement 

Oil Deal Gets Mixed Reviews

By Candia Dames

candiadames@hotmail.com

Nassau, The Bahamas

4th July 2005

Players in the local oil-providing sector have mixed reviews on the recent signing of the PetroCaribe initiative, which promises to cushion Caribbean nations – including The Bahamas – from skyrocketing fuel costs.

But there is consensus on the fact that more consultation is needed between the government, the three major oil companies, and retailers.

Oil companies are seeking clarification on the whole deal, said Troy Simms, country/sales manager at Esso.

"We feel we should be an advisor to the government on this considering the experience we have locally and of course across the globe," Mr. Simms said.

"This is a pretty important change that’s being put on the table.  We really want to make sure that it’s being discussed with a lot of rigor to make sure that the government is fully aware of the risks."

Texaco’s manger, Raymond Samuels was out of town, but another executive at the oil company said that Texaco is also eager for dialogue on the initiative.

The executive said up to now, Trade and Industry Minister Leslie Miller has "not been open with us" about the plan.

Under the plan, signed by regional energy ministers and other leaders in Venezuela last Wednesday night, Petroleos de Venezuela, the state oil company, will pick up 40 percent of the cost if oil is selling at more than $50 a barrel.

Venezuela has also promised that additional concessions would become available should prices reach $100.

Petroleos de Venezuela has also announced that it would also pay for oil shipment costs, and help to construct storage facilities throughout the region.

It’s a plan Minister Miller said last week would result in "tremendous savings" on electricity and cooking gas bills and at the gas pumps.

It would be welcome news, said Gardner Dawkins, president of The Bahamas Petroleum Retail Association.

"I think it will be good news for both the retailer and consumers," he told The Bahama Journal.  "We’re hoping that we’ll be buying fuel at a lower price.  Therefore, passing the savings on to the consumers."

Minister Miller has said those savings would be significant – up to $20 million in savings for BEC annually, and at least $1 in savings on a gallon of gasoline, which is now approaching $4.

Mr. Simms, the Esso manager- said that the company is not sure of the likely impact PetroCaribe would have because it has not yet received details of the agreement.

Petroleos de Venezuela has agreed to ship fuel directly to Caribbean nations like The Bahamas, which have signed the agreement.

Asked whether this would be something Esso would welcome, Mr. Simms said, "There’ve been some concepts discussed and we continue to wait for some details.  One thing that the proposal seems to implicate is that there would be a single source of supply and this appears to be with the Venezuelans."

He said there are risks in having a single source of supply and Esso’s primary concern would be about reliability of supplies.

"If we can’t get the product when we need it, it’s going to have a detrimental impact on the business," Mr. Simms said.

He added that his impressions of how the whole arrangement would work is that the government would become the middleman.

"We need to fully understand how this would be implemented because this is a very complex and sophisticated supply system that’s now in place, that has been successful for so long.  We have a lot of experience…the industry can handle unexpected changes and delays," said Mr. Simms, while stressing that the supply of oil to a small country like The Bahamas is a complex and costly undertaking.

"The folks in our industry have learnt over many, many years how to do this efficiently and be reliable.  We need to be able to deliver petroleum products in a very safe and reliable manner."

Mr. Simms said that it’s much too soon to even speculate on how the PetroCaribe is likely to impact profits of local oil companies.

In his interview with The Bahama Journal last week, Minister Miller also said that the government expects to take another look at the operating margins in the industry.

Mr. Dawkins said this is something that retailers will fight.

"Our margins are what we survive on," he said.  "The price of the gasoline will not change what our margins are."

He added that PetroCaribe would have more of an impact on the wholesalers because they are the ones who will be buying from PetroCaribe or the national energy corporation.

"So therefore we as the retailers will still be at the mercy of the wholesalers who we will be buying products from," Mr. Dawkins added.

He disagreed that PetroCaribe will be risky business.

"The oil companies, of course, are not going to be too happy with it," Mr. Dawkins said.

The Bahamas Signs Petrocaribe Initiative

The primary thrust of the initiative, known as Petrocaribe, is to eliminate the middlemen when it comes to the purchase of fuel and fuel-related products

Oil Deal Sealed

By Candia Dames

candiadames@hotmail.com

Nassau, The Bahamas

1st July 2005

Bahamian consumers are expected to soon experience significant savings on energy costs as a result of a new deal sealed in Venezuela on Wednesday night, which is designed “to build a regional oil alliance and distribute fuel more cheaply in the Caribbean.”

Minutes after arriving from a high-powered energy summit in Puerto La Cruz on Thursday, Minister of Trade and Industry Leslie Miller declared that the agreement was a significant and historic one.

He also explained that the primary thrust of the initiative, known as Petrocaribe, is to eliminate the middlemen when it comes to the purchase of fuel and fuel-related products.

One of the ways Venezuela proposes to keep oil costs down in the region is to use its tanker fleet to transport oil instead of privately owned tankers.

"For The Bahamas, [The Bahamas Electricity Corporation] can realize a savings of no less than $10 million to $15 million per annum in their fuel costs," Minister Miller told The Bahama Journal.

In addition to that, BEC, which last year spent in excess of US$100 million for its fuel costs, can now get the benefit of getting 40 percent of the fuel on credit from Petrocaribe, he said.

"BEC can get rebates on fuel and at tremendous savings," Minister Miller said.

"If BEC were to purchase $20 million worth of fuel per month, BEC would pay approximately 60 percent of that bill.

The balance can be paid over a specified period of time at 1 percent interest rate."

With the middlemen being sliced out of the pie, the Minister also reported that huge savings are on tap at the gas pumps.

His announcement came as motorists continued to face prices approaching the $4 per gallon mark.

"We’re looking at an average savings of no less than $6 per barrel which equates to approximately in our estimation anywhere from 25 cents to 30 cents on a gallon of fuel," he said.  "That’s the initial cost.  Bear in mind that the oil companies here use their brokerage companies, in Barbados and Jamaica and elsewhere, to purchase fuel from PDVSA, which is where we’re going to get our fuel from.

"By eliminating the middlemen, we save another 25 cents to 35 cents on a gallon of fuel.  In addition to that, Petrocaribe is now in a position by having ships to lift the fuel for you.  In other words, Petrocaribe would send one of its ships to The Bahamas full of fuel emanating from any of the terminals owned by PDVSA, which is the national oil company of Venezuela, thereby saving an additional 5 cents to 10 cents on a gallon of fuel."

Altogether, he claimed the average consumer can look for a savings of anywhere from 65 cents to $1 per gallon on the price of fuel in The Bahamas.

The Minister added, "Keep in mind that we still need to cut the margins by the three major oil companies that import fuel into our country from a high of 33 cents down to around 25 cents to 15 cents per gallon, which is more than enough to enable them to make an appreciable profit margin."

But Minister Miller could not say specifically when the savings will begin to materialize.  He told The Bahama Journal that it will happen as soon as the government gives the green light for the establishment of a national energy corporation.

"The prices at the pumps could be decreased significantly, but we must initiate the national energy corporation to enable us to lift fuel from Venezuela," he said.

Heads of state and energy ministers attended the energy summit from The Bahamas and 14 other nations in the region.

They included Dominican Republic, Jamaica, Belize, Antigua and Barbuda, Barbados, Grenada, St. Kitts-Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, Cuba, Venezuela and Trinidad and Tobago.

The final agreement said, "Petrocaribe emerges as a new political and commercial initiative based on the conservation of non-renewal and depleteable resources, shared solidarity, and social co-responsibility between peoples, tending to assure access to energy at a just and reasonable price, under the sign of regional energy integration, with a broad vision that touches not only on energy, but also on the social, technological, and culture."

Among those attending the meeting were Venezuelan President Hugo Chavez, and Cuban President Fidel Castro.

National Lottery for The Bahamas Later rather than Sooner

The Introduction of a National Lottery is not on the Front Burner in The Bahamas

Study Completed On Nat’l Lottery

By Candia Dames

candiadames@hotmail.com

Nassau, The Bahamas

30th June 2005

The Gaming Board has completed a report on the feasibility of a national lottery, but its Chairman Kenyatta Gibson indicated on Tuesday that it’s not something that’s likely to become a reality anytime soon.

"We’ve looked at it, with regards to the introduction of a national lottery," he told The Bahama Journal.  "That report for all intense and purposes is completed, and soon as we make it available to Cabinet, we would thereafter come and let the general public know exactly what’s going on with it."

But he said, "That’s not an issue on the table right now in any event, and I think once the time comes for the nation to deal with it, we would deal with it in earnest."

It is no secret though that Mr. Gibson is a strong supporter of a national lottery.

He has in the past pointed out that The Florida Lottery conservatively estimates that US$100 million is spent every year by Bahamians playing the Florida Lottery.

"This is money that we can keep here in The Bahamas," Mr. Gibson has said.

He has also suggested that the taxes from a national lottery could be used to fund universal free tertiary education for every qualified student.

In matters as contentious as this one, the most qualified forum to decide definitively on the issue must be the people, Mr. Gibson said in one of his speeches to the House of Assembly where he touched on the issue.

"On moral issues such as these, national referenda are necessary to discuss, assimilate and decide on various courses of action that must be taken on the gaming issue," he said.  "I believe that governance, real true democratic governance, is about adhering to the will of the people…The Bahamas cannot be standoffish."

Tourism Minister Obie Wilchcombe, who is responsible for gaming, also supports the introduction of a national lottery.

He has already revealed that 60 percent of the adult population of The Bahamas spends anywhere from $1.8 million to $2 million both locally and abroad on games of chance each week, and that there are at least 45 illegal gambling houses in New Providence and 12 in Grand Bahama.

"Our choices are very clear," Minister Wilchcombe has said.  "We must either strengthen the penalties for this illegal activity or we must find the formula to introduce a national lottery."

Mr. Gibson said on Tuesday that he expects that the new report will soon be made public.

Fred Mitchell Blasted on the CARICOM Single Market and Economy - CSME Debate

Mitchell Blasted On CSME

By Candia Dames

candiadames@hotmail.com

Nassau, The Bahamas

June 20, 2005

Chairman of the government-appointed Bahamas Financial Services Consultative Forum Brian Moree believes it was unfortunate that Minister of Foreign Affairs Fred Mitchell deemed it appropriate last week to "impugn and demean" the views and motives of certain persons who opposed his views on the CARICOM Single Market and Economy.

"In doing so the Minister seemed to think that this somehow vindicated his position or strengthened his case on CSME.  I think, with respect, that he was wrong and in doing so he did not enhance his cause or the dignity of his office by resorting to name calling and finger pointing," said Mr. Moree, who also commended the government for "listening to and considering the views of the Bahamian" people on CSME.

During his address one week ago today, Minister Mitchell announced that the government will not be signing the Revised Treaty of Chaguaramas within this present term, and lashed out at various individuals who had opposing views on whether the country should join the regional agreement.

Minister Mitchell said that some detractors of the CSME were false prophets who opposed the independence of The Bahamas back in the early 1970's and are now crying crocodile tears over the issue of CSME and an alleged threat to the country's sovereignty.

He also named several people directly, including Mr. Moree, whom he accused of spreading misinformation on the issue.

But Mr. Moree, in his statement issued over the weekend, said, "The simple fact is that the Minister, as the lead spokesman for the government, failed to convince thousands of Bahamians that signing the Revised Treaty was in the national interest of our country.

"If he is unhappy with that position he should not seek solace in lambasting those who did not share his view.  Rather, I respectfully suggest that it would be more constructive for the Minister to focus on the relevant issues and at least countenance the thought that there might be some merit in views other than his own."

Refuting more of what the Minister said in the House of Assembly last week, Mr. Moree added, "I regret that it is necessary to remind the Minister that those of us who do not agree with his assessment of the CSME are not unintelligent, confused, uninformed or misguided.

"My opposition to the CSME is not, and has never been, politically motivated or in any way related to the Minister in his personal capacity.  I repeatedly made the point in my public statements that the CSME is not a political issue and the national debate should proceed on that basis."

Referring to Mr. Moree, Minister Mitchell in his address said that as the chairman of The Bahamas Financial Services Consultative Forum, caused "quite a stir in the community" when his group released an immigration report suggesting that the immigration laws of The Bahamas should be liberalized to allow for more foreign workers to come and work in the financial services sector.

"Now he comes a few months later and says that we must not sign onto the CSME provisions because they would allow the free movement of people," the Minister said.  "I must be missing something here.  What is the principle at stake here?  If you believe in liberalized immigration what problem in principle then do you have with the CARICOM treaty which believes in liberalized immigration?

"But I have to add quickly, the government is not proposing anything to do with the free movement of people.  That reservation is proposed and already agreed.  It is the existing situation and status quo.  But you know never let the truth interfere with a good story."

Mr. Moree also responded to the Minister's comments in this regard.

 "He characterized that report as suggesting that the immigration laws of The Bahamas should be liberalized to allow foreign workers to come and work in our financial services sector," Mr. Moree noted.

"Remarkably, and with no basis in truth, the Minister then boldly attributed to me the position that The Bahamas 'should not sign onto the CSME provisions because they would allow the free movement of people'.

"As I am the chairman of the forum, the Minister ridiculed this position which he attributed to me on the CSME as contradictory to the contents of the report.  The Minister was clearly inferring that I was advancing irreconcilable positions, apparently in an attempt to discredit my opposing view on the CSME.  This is a most convoluted and distorted thought process."

Mr. Moree pointed out that he did not object to the CSME simply because it would allow the free movement of people.

"While that is certainly a legitimate concern for many Bahamians, even considering the reservation in respect of Articles 45 and 46, there were and continues to be many additional well reasoned, thoughtful and principled objections to The Bahamas signing on the CSME.

"Secondly, there is absolutely no inconsistency between supporting the recommendations in the forum's report and the position adopted by me in opposing the CSME.  Specifically, there is no helpful comparison between the narrow liberalization of our immigration policy as it relates to a single sector in selective and targeted areas of specialization on the one hand and the open sesame which (but for the reservation) is envisaged in the Revised Treaty on the other hand whereby ultimately there would be no restrictions on the nationals of 15 different countries moving freely between the member states in a single economic space."

Mr. Moree added, "The Minister should follow his own admonition and avoid subterfuge and confusion when commenting on the CSME.  My views on the CSME as it relates to The Bahamas are based on my consideration of our national interests.

"Presumably the same can be said of the views of the Minister.  No one involved in the debate should claim to have a monopoly on virtue and certainly the national debate is not advanced by denigrating persons who hold a different view or impugning their motives."

In his budget address last week which focused exclusively on the CSME issue, Minister Mitchell also blasted former Ministers Sir William Allen and Zhivargo Laing; Bahamas Public Services Union President John Pinder; attorney, Fred Smith, who heads the Grand Bahama Human Rights Association; and the Nassau Institute. 

The Bahamas Government’s Commitment to Fiscal Prudence Questioned

Hubert Ingraham on Fiscal Prudence

Ingraham Slams Budget

By Candia Dames

candiadames@hotmail.com

Nassau, The Bahamas

17th June 2005

There appears to be a disconnect between an expanding economy and the growth in government revenue, former prime minister, Hubert Ingraham, declared in the House of Assembly on Thursday as he questioned the government’s commitment to fiscal prudence.

During the budget communication on May 25, Acting Prime Minister Cynthia Pratt noted that the government is aiming to contain the ratio of government debt to GDP to under 38 percent in fiscal year 2005/2006.

Expert advice is that the government should limit the ratio of government debt to GDP to as near as possible to 30 percent "so as to avoid the problems which would arise from a ratio significantly in excess of that level."

The government also projects that in the two fiscal years that will follow 2005/2006; the ratio of government debt to GDP will still remain around the 37 percent level.

At the time, the Acting Prime Minister also noted that the ideal government revenue to GDP is about 20 percent, but she admitted that this is becoming increasingly hard to achieve because of the narrowness of the country’s revenue system, which is heavily dependent on customs duties.

The government also projects a GFS deficit of $172 million, which would be $30 million more than what was projected for 2004/2005.

However, Mrs. Pratt stressed that the economy is on the upswing with growth of 3.5 percent expected in 2005.

The projections were the basis for Mr. Ingraham’s declaration of an apparent disconnect.

In the five years immediately prior to September 2001, government revenue averaged roughly 19 percent of GDP, he said, adding that the actual results of the following three years show government revenue falling by more than 2 percentage points to under 17 percent of GDP.

"It is therefore not a sufficient economic policy to focus exclusively on foreign investment and its impact on economic growth when that economic growth is not simultaneously translating into increased government revenue," Mr. Ingraham reasoned.

"Nothing can more quickly and more effectively arrest that flow of inward investment than a fiscal situation which is not sustainable, where the level of debt continues to rise by an ever increasing proportion of GDP, and where doubts about the commitment of fiscal management may legitimately arise."

He also indicated that after falling continuously since fiscal year 1996/1997, government debt as a percentage of national income has been increasing steadily each year since fiscal year 2001/2002.

"It would have been desirable for this budget to give a signal of a commitment to change in this pattern," Mr. Ingraham said.  "It did not."

He also pointed to the projected outcome of a GFS deficit of 2.8 percent for 2005/2006, the same outcome projected for 2004/2005.

"As a result, government debt as a per centum of GDP is projected to grow by 1/2 of 1 percent in fiscal year 2005/2006, rising from 37 percent to 37 1/2 percent and projected to rise further in 2006/2007," Mr. Ingraham said.

"This [is going to happen] at a time when the economy is projected to grow by a nominal rate of more than 5 percent.  There is no better time to send the signal of fiscal prudence than now.  If it cannot be done now, when can it be done?  Next year with election in the air?"

He said the widening of the recurrent deficit over the last several years has to be a major concern for those who value prudent fiscal management.

"The recurrent balance is a critical element in fiscal management," he reminded.  "For governments, it reflects the long-term sustainability of its fiscal situation.  It is for this reason that my government’s fiscal policy focused so heavily on the recurrent account which led to a substantial lowering of the level of recurrent imbalances and eventually resulted in a surplus on the recurrent account for two fiscal periods running – 1999/2000 and 2000/2001, for the first time in 23 years."