In all honesty, the idea of urban renewal cannot be claimed as being the brainchild of either the Christie or Ingraham administrations... It preceded both by many years... In fact, Urban Renewal in the broadest sense of the word was the brainchild of Sir Stafford Sands, the creator of this country's tourism and financial industries

A people betrayed, says Ed Moxey, of the Pindling years

tribune242 editorial




THE PANACEA to all this country's social problems is Urban Renewal, PLP-style. The constant cry of the PLP is that the FNM came along, stole the PLP's idea, destroyed it and, in so doing, opened a Pandora's box of destruction for these islands. Everything, including escalating crime, both in the streets and in the schools, can be blamed on the elimination of the PLP's novel idea -- Urban Renewal.

For their part, the FNM maintains that although police patrols were removed from the school campus, the structure of urban renewal was not destroyed, but rather improved upon and broadened.

In all honesty, the idea of urban renewal cannot be claimed as being the brainchild of either the Christie or Ingraham administrations. It preceded both by many years.

In fact, Urban Renewal in the broadest sense of the word was the brainchild of Sir Stafford Sands, the creator of this country's tourism and financial industries.

In a conversation with Sir Stafford shortly after the UBP lost the government to the PLP in 1967, he assured us that he was leaving a financially healthy government. All the PLP had to do, he said, was to sit on their hands and let all his party's plans go through and the country would be in good shape. However, if they got itchy fingers and started tinkering, everything could collapse.

Sir Stafford Sands was a five-year planner. A brilliant, and well organised man, he always worked on a five-year plan. So when the PLP came in, they would have found that tourism conventions, and functions had been booked for five years into the future and the Public Treasury was financially sound. Sir Foley Newns, the able colonial British administrator, who had worked with Sir Stafford as Cabinet Secretary from 1963, was kept on by the PLP until 1971, just one year short of Sir Stafford's five-year programme. Slippage started after he left.

Sir Stafford, the Minister of Finance in Sir Roland Symonette's government, with the approval of his colleagues, commissioned a Development Plan of New Providence Island and the City of Nassau in the summer of 1966. Working through the United Nations, Columbia University's division of Urban Planning in its School of Architecture was engaged to do the work.

What resulted was a magnificent, detailed, beautifully presented transformation of this island -- down to where every underground pipe was to be laid. It also provided for population growth. It was unfortunate that it was completed and returned to the Bahamas in the spring of 1967 after the UBP had been voted out of office. However, every member of the House of Assembly received a copy. And there it died.

"If it had been implemented," said Mr Moxey in his documentary, "the plan would transform over the hill, in particular the Grants Town community, installing a sewer system, and laying out the city centre, in a way seen only in Grand Bahama and Mathew Town, Inagua. There would be green spaces and bike paths, and streets dedicated to the children of New Providence."

About 13 years later, Arthur Hanna, then deputy prime minister, explained the reasons for the plans not being considered. He said it was because "there was no cost assessed for the implementation of the plan; no one was identified to pay the cost, and there was no suitable organisational administrative mechanism for translating the plans into reality".

On that statement alone -- exposing both incompetence and lack of imagination -- the PLP government should have been fired. A master plan had been put in the their laps, and they were waiting for a fairy godmother to show them how to use it.

The UBP government's urban renewal plan was introduced by Ed Moxey, a former member of the PLP Cabinet at that time, in his documentary, which had its premier showing on Sunday night in which he recorded his personal sacrifices to try to save Jumbey Village for the upliftment of his people. In the end, he lost the battle, but not his integrity -- although Sir Lynden also tried to take that from him. In his documentary Mr Moxey told how Sir Lynden had betrayed a trusting people, and the price that he personally had to pay for having an idea that dwarfed his party leader's myopic thinking.

Last night, Mr Moxey in speaking of Sir Stafford's plans, which preceded his own vision for Jumbey Village, had this to say:

"It is unfortunate that the Urban Renewal Study and programme initiated by Sir Stafford Sands for the black masses of Bahamians was trampled under the feet of our leaders and advocates of the Quiet Revolution in 1967.

"It is like I said 25 years ago, the revolution was betrayed and after 45 years of majority rule our people over the hill still live in substandard conditions using outside toilets and water pumps. Oh, my Lord, what a shame!"

Is this the unsound bridge that Opposition Leader Perry Christie has invited Bahamians to cross with him into the future? We hope not.

March 22, 2012

BACKBENCHERS DISILLUSIONED BY GOVT - MOXEY

tribune242 editorial

Caribbean Blog International

The Bahamian relationship with the Haitians who migrate here is complicated... Haitians have come to The Bahamas since the creation of the Republic of Haiti in 1804... With the collapse of Jean Claude Duvalier’s regime in the mid-1980s, however, those flows increased ...as Haiti’s poor looked for new lives in new places

Embracing multiculturalism

thenassauguardian editorial

The comments of Haitian President Michel Martelly to Haitian-Bahamians when he recently visited The Bahamas led to much debate.  Martelly advised Bahamians of Haitian descent to form a voting bloc, and to vote for the party that has their best interests at heart.  His remarks exposed raw emotions on the immigration issue in our country.

The modern Bahamas is a nation created through migration.  The Amerindians Christopher Columbus met here 520 years ago are no more.  Europeans and Africans displaced those people when permanent contact was made between the old and new worlds.

Today’s Bahamas is even more ethnically and culturally dynamic.  People from the Middle East, China and India also call this country home.  They bring their experiences to our cultural mix, expanding The Bahamas.

The Bahamian relationship with the Haitians who migrate here is complicated.  Haitians have come to The Bahamas since the creation of the Republic of Haiti in 1804.  With the collapse of Jean Claude Duvalier’s regime in the mid-1980s, however, those flows increased as Haiti’s poor looked for new lives in new places.

Some Bahamians resent the large number of poor Haitians who have come here looking for a second chance.  Some Haitians are upset at the discriminatory treatment they have received from some Bahamians.

Martelly should not have gotten involved in Bahamian politics while visiting.  Staying out of local politics while on foreign trips is a convention of diplomacy, but his intrusion into Bahamian politics is no excuse for bigotry and xenophobia.

The Government of The Bahamas has as a responsibility of carrying out the laws of the country.  It should provide our border protection officers with all the resources needed to prevent people from illegally entering Bahamian territory.  Foreigners who come here illegally should be repatriated in accordance with the law.

But what must be remembered is that those who are given citizenship are Bahamians once that decision is made.  They should be afforded the same rights and privileges as other Bahamians.

We can debate who should be given permanent residence as opposed to citizenship.  Countries have the authority to set residency standards based on the consensus of the times.  However, we should not disparage those given status or argue that they are lesser citizens if citizenship was granted.

In deciding to become part of our community these new Bahamians bring different ideas, languages, traditions, foods and energies to our already multicultural society.  And as a culturally richer community, we should work together to solve common problems.

Haitian-Bahamians should not close themselves off and form exclusive political blocs to defend themselves.  Haitian-Bahamians should, like all other Bahamians, examine the various political parties and candidates and determine who is best to advance The Bahamas.

Conversely, “native” Bahamians should not fear the inclusion of new people into our commonwealth.  What should exist is an immigration policy that can reasonably control who comes to The Bahamas.  We should seek to recruit people from around the world – in the numbers we think reasonable – to add skills to our country.  In doing so, we as a nation become stronger.

When governments are unable to police the flow of people to a territory, the established community becomes suspicious.  Hence, it is important for clear immigration policy to exist and resources to be provided to help ensure the policy is enforced.

We hope the passions cool on this issue.  Ethnic rivalry has made many countries unstable and has led to conflict and war.

Mar 23, 2012

thenassauguardian editorial

Caribbean Blog International

...the Democratic National Alliance (DNA) has tried to gain political mileage by stirring up a controversy over oil exploration in The Bahamas

Oil drilling in the Bahamas - the facts behind the scares

 

By LARRY SMITH:

 

 

IN RECENT weeks, the Democratic National Alliance has tried to gain political mileage by stirring up a controversy over oil exploration. But rather than focus on the very real substantive issues in a constructive way, they chose to launch a series of personal attacks and conspiracy charges.

In view of the enormous international pressures and revenues that can be expected, together with the dramatic changes to our way of life that are implicit in future oil production, not to mention the incredible pollution risks, it is worth taking a closer look at this issue - particularly in the context of the accusations of cover-ups and carve-ups.

Our original petroleum act was passed in 1945 to facilitate exploration by Gulf Oil, Standard Oil, Superior Oil and Shell. It was replaced by legislation enacted by the Pindling government in 1971, which came into effect seven years later and remains in force today.

The last exploratory well was drilled here in 1986 by a company called Tenneco, and while no commercial production followed from those early explorations, there were oil shows and most experts are convinced that large quantities of petroleum lie beneath our seabed.

The Christie government awarded a British group (later constituted as the Bahamas Petroleum Company) five new exploration licenses for just under four million acres in 2006. The licenses became effective just before the last general election in April 2007, when they were signed by the governor-general. And for the past several years, BPC has been conducting geophysical research in the Bahamas.

Now BPC says it is preparing to conduct appraisal drilling south of Andros, and the DNA thinks this amounts to a conspiracy involving secret deals. The party has set up a Facebook petition on oil exploration, asking Bahamians to sign "If you think we should control our resources to benefit all Bahamians, so we can demand answers before it's too late".

From the commentary it has made, the DNA is clearly not opposed to drilling, but is simply trying to stir the pot. This is not necessarily a bad thing, but it depends on how it is done. Accuracy and honesty are important when making public statements on complex issues. Publishing false statements and facilitating wild allegations will lead to a rapid loss of credibility.

For example, according to the DNA, "this government negotiated a 12.5 per cent (royalty), one of the worst in any country". In fact, it was the Pindling government - back in 1971 - that set a then industry-standard minimum royalty rate of 12.5 per cent "of the selling value at the well-head of the petroleum won and saved from the licensed or leased area".

And, contrary to what the DNA now alleges, the licenses awarded to the Isle of Man-based Bahamas Petroleum Company in 2007, set a sliding scale of 12.5 to 25 per cent of production value, a fact which BPC clearly shows on its website.

Those licenses were never renewed, because the government imposed a moratorium on oil exploration in 2008, while efforts were made to pin down precise maritime boundaries with Cuba, the US and the UK/Turks & Caicos Islands. The boundary with Cuba - where four of the BPC licenses are located - was finalised last October.

In 2010 - following the catastrophic Gulf of Mexico oil spill - the government decided to step back and review the entire petroleum policy framework before allowing exploration to resume. The Ministry of the Environment also required all license holders and new applicants to produce environmental impact assessments for the areas they wished to explore.

There are currently seven approved licenses for oil exploration in Bahamian waters, and 10 applications for new licenses have been submitted since 2008. Five of the approved licenses are held by BPC. The other two are held by Liberty Oil, but were suspended because of the company's failure to remove a sunken vessel from an Abaco reef.

A US company called NPT Oil has applied for seven licenses covering more than six million acres north of Grand Bahama. NPT's Bahamian data and assets were recently acquired by Pennine Petroleum Corporation, an emerging oil and gas exploration and development company active in Alberta and Saskatchewan.

A Canadian geophysicist named Allan Spector has applied for an onshore license near Seymours on north Long Island. And a partnership between BPC and the Norwegian company Statoil has applied for three licenses covering more than 2.3 million acres near the Cay Sal bank.

DNA Montagu candidate Ben Albury - who has led the party's campaign on this issue - says he is simply demanding transparency and information. But he has also accused Environment Minister Earl Deveaux of gross malfeasance, without any evidence, and has succeeded in making the issue more opaque, rather than clearer, for the average Bahamian.

"My main issue," he told me over the weekend, "is the dodging of the questions by Deveaux. If you listen to his comments, he makes it sound as if there is a moratorium on oil exploration, (but) BPC is telling the media that they intend to drill in the coming months."

Albury cites a Miami Herald article published last October, in which Dr Paul Gucwa, BPC's chief operating officer, refers to plans for an exploratory well by the end of this year. "The Bahamian government has a moratorium on granting new exploration licenses," the Herald reported, "but... that could change following the country's May general elections. BPC has contacted 10 major international oil companies about partnering in its oil exploration operations."

A review of Deveaux's statements on this matter over many months, if not years, shows an entirely consistent position. He has repeatedly stated that the exploration freeze will remain in effect until an updated regulatory system has been put in place. He has also said that the present government is committed to the widest possible public consultation on the issue of oil production.

However, if you listen to the talk shows, some Bahamians are already gearing up to stop work and collect their "black gold" dividend cheques, while others are worried about secret backroom deals in which the well-connected carve up the country's seabed for their personal benefit.

Interestingly, there may be some truth to this. As mentioned earlier, experts have believed for decades that large quantities of oil and gas lie beneath the Bahamian seabed, and now that drilling technologies and market prices have reached the point where exploitation is not only feasible but profitable, we can reasonably project a massive influx of petroleum revenues in the near future.

But that is precisely why the government is seeking to overhaul our regulatory, legislative, environmental and financial regimes, in order to lay the groundwork for the orderly development of this industry (whether you like it or not). As Deveaux told me over the weekend: "Without detailing all the issues inherent in something so materially significant, it is a clear responsibility of the government to prepare the country for oil and its likely consequences."

The DNA appears to be confused because, under existing Bahamian law, licensees are required to drill an exploratory well within a certain timeframe - which in BPC's case is prior to April 2013 - or risk forfeiting their rights. The company says it has completed the required environmental impact assessment for this test well and is already working on a management plan.

Meanwhile, Environment Ministry officials have met with their counterparts in Norway to discuss revisions to the existing act and regulations, and consultants have produced working drafts for the government to review, after which they will go to the attorney-general. Deveaux says the proposed regulatory system will be included in his hand-over notes for the next government.

"Our visit to Norway in December was very useful and the government has agreed in principle to use that country's policies as a guide in developing a Bahamian petroleum industry," Deveaux said.

Norway began offshore petroleum production in 1971 and is now the world's seventh largest oil exporter and second largest gas exporter, with some 600 licenses awarded to a variety of companies. Norwegian officials have advised the Bahamas to have all the essential elements of oil and gas governance in place before any drilling begins. These include environmental, safety, tax, revenue, training and employment policies; contingency plans; and insurance requirements.

Norway's national petroleum policy seeks "to ensure long term management of, and value-creation from, the country's petroleum resources". Oil and gas activities are restricted to offshore waters, and all subsea resources are vested in the state, which is charged with managing them for the benefit of Norwegian society as a whole.

As we said, under the current Bahamian act, an exploration license includes an obligation to drill, and a bond must be posted to that effect as a way of precluding speculators. Exploration licenses are awarded for an initial term of three years, renewable for two successive three-year periods, but the 2008 moratorium meant that BPC's original license was put on hold and never technically renewed.

Similarly, if BPC's exploration is successful, current law says it is "entitled" to a renewable 30-year lease to begin commercial production. The royalty rate for production of oil and gas is based on a sliding scale of 12.5 to 25 per cent (from which the lease fee is deducted), with no other taxes or fees required. Equipment can also be imported duty-free.

On its website, BPC says that its license expires on April 26, and it has applied for renewal. The company notes that if it meets its obligations, "the governor-general shall renew the licences for another three years provided the company commits to drill an exploration well and (starts) the well before the end of the first renewal year, ie, by April 26, 2013".

So there is clearly some tension between the positions of the government and BPC, which claims to have invested $50 million so far to explore. Appraisal drilling is projected to cost several hundred million more, and obviously the company expects to benefit from this investment. But the petroleum act was written 40 years ago, and is silent on many of the complex issues the Bahamas would face as an oil producer.

Meanwhile, the DNA has rightly argued that oil drilling threatens two of the country's biggest industries - tourism and fishing. "(We) demand to know if Mr. Deveaux and the FNM government have ensured the protection of Bahamian interests," Ben Albury says. Well, the short answer is that Deveaux has repeatedly talked of the need to train Bahamians to manage a new regulatory environment.

"We have to come to the public with full information," Deveaux told me. "We want a standard of management similar to that of Norway. We need a petroleum directorate that is fully staffed with a range of expertise, including financial. If oil is produced we will be dealing with billions of dollars, changing the whole culture of the country and the way the government deals with money. It is no small thing."

In Norway, for example, surplus oil revenue is deposited in a $600 billion sovereign wealth fund so that the country's non-renewable resources can benefit future generations. The fund is managed by the central bank, under rules developed by the Ministry of Finance, and is responsible to parliament, with the interest used to cover government pension obligations.

Consultants have also advised the Bahamas to increase royalties and adopt profit sharing with oil companies in order to compensate for the absence of a corporate income tax.

As noted earlier, BPC's licenses were awarded by the Christie administration in 2006, and signed by former Governor-General Arthur Hanna in April, 2007. It is noteworthy that PLP candidate Jerome Gomez is the company's resident manager, former PLP cabinet minister Sean McWeeney is its senior counsel, and PLP deputy leader Brave Davis' law firm is the company's onshore legal advisor.

What is even more noteworthy is that the PLP has so far ignored this important public debate. The FNM's position is that "nothing can happen until the government approves and nothing will happen until there is public consultation". The DNA says it will hold a national referendum on oil exploration and production. The PLP is heavily conflicted in this matter and has said nothing.

Did someone mention carve-up and cover-up?

* What do you think? Send comments to larry@tribunemedia.net or visit www.bahamapundit.com.

March 21, 2012

tribune242

Bahamas Blog International

We remember when Mr. Dennis Dames first started writing letters for publication in The Tribune... and so we guess that he is too young to remember the elections of the sixties and the Progressive Liberal Party (PLP) "goon squads" where election violence all started

Protect our Constitutional rights

tribune242 editorial




OUR CONSTITUTION guarantees every resident of this country the right of free speech, conscience and assembly. No one - election or no election - has the right to interfere with these basic freedoms. Those who do should be severely punished.

Freedom of conscience assures each and everyone of us the right to our beliefs, regardless of how others might disagree. Freedom of expression gives us the right to express those beliefs as we see fit, as long as we respect the rights of others to do the same. In other words we all agree to disagree, but in a friendly manner, one respecting the right of the other to have his turn on the floor. We also have the right to free association with persons of like mind, including political parties. Under our Constitution, no one has the right to interfere.

These inalienable rights should be ingrained in each of us from childhood. To be devoid of them on reaching adulthood means that such persons have been lost on the fringes of civilisation. They live in a democracy, but they neither belong nor appreciate that democracy. The only time that there is a squeak out of them is if someone retaliates by stepping on their toes -- it is only then that they become aware and quickly demand their constitutional protection.

In a letter to The Tribune today, Dennis Dames commends Killarney MP Dr Hubert Minnis (FNM) for calling for "calm heads to prevail" during this election season.

"We must remember," said Dr Minnis, "that we are all Bahamians and when the election is over, we must all still live together in this Bahamaland. It is not unusual for one home to have individuals who support different political parties but what is unusual for us, is for family members not to support each other, instead allowing political persuasions to affect our family bond.

"We must continue to respect an individual's right to speak, support and vote for the party of their choice, as this is the fundamentals of the democratic process at its best. We must bring out the best in each other; we should practice patience, hospitality and love. We should abstain from mud-slinging and personal attacks on each other because at the end of the day, we all want one thing, a better Bahamas. No one wants to live in a violent, unfriendly environment."

Dr Minnis called for peace and respect one for the other on learning that the daughter of one of Grand Bahamas' FNM candidates, and three other supporters were sprayed in their faces with a fire extinguisher by a PLP supporter.

Why would anyone carry a fire extinguisher to a political rally? This case should be thoroughly investigated and, if found to be true, the culprit or culprits should be severely punished.
In commenting on Dr Minnis' call for calm, Mr Dames wrote that he had "never experienced such touchiness, itchiness, and angriness among Bahamians of different political perspectives in the Bahamas until now".

He said that if things continue on this course, "we could be in for something violently new in our electoral process and it will be a direct reflection of our 21st century political leadership in the Bahamas".

We remember when Mr Dames first started writing letters for publication in The Tribune, and so we guess that he is too young to remember the elections of the sixties and the PLP "goon squads" where election violence all started.

Today we are only reaping the seeds that were sown then -- violence, disrespect for law and order, disrespect for our elders and ourselves, satanic worship at the altar of materialism - on and on into today's pit of degradation. Today in almost every aspect of our decadent social behaviour we are reaping the evil seeds that were sown then.

In those days, the PLP's goon squads, with their loud clackers, were so violent that public rallies could not be held. We recall one night covering a political meeting in Fox Hill's school house when the building was stoned. The foreign journalist with us, sent to cover the election, was so frightened that he crawled under one of the classroom benches for protection. People were injured, people were sent to hospital. Their pictures made the front page of The Tribune.

Bahamians were frightened to write letters to The Tribune, and those who did never attached their names. One night a woman's home was stoned because it was believed that she had written a letter critical of the PLP to The Tribune. Properties were burned, a policeman was sent to The Tribune to try to force us to reveal the identity of a Freeport letter writer. The police officer disliked his assignment as much as we did, and so we had a friendly chat, wished him well and sent a stinging message back to the PLP Cabinet minister who had sent him. By the seventies, we were into the drug years --fast boats, retaliatory killings, and a general breakdown of all the rules that had held a Christian society together. Fast money was a badge of success.

And so do not "send to know for whom the bell tolls," it tolls for each and every one of us. Now is the time for zero tolerance -- either that or surrender our society to the refuse born and bred in the sixties.

March 21, 2012

tribune242 editorial

Caribbean Blog International

...delighted today to have read the message of peace in this election season and beyond ...by the Free National Movement’s candidate for Killarney; the Hon. Hubert Minnis

By Dennis Dames

I was delighted today to have read the message of peace by the Free National Movement’s candidate for Killarney; the Hon. Hubert Minnis. He wrote about allowing calm heads to prevail this election season and beyond.

It’s a point worth repeating by all responsible politicians in the land, as the temperature is truly rising among the people across the political divide. I have never experienced such touchiness, itchiness, and angriness among Bahamians of different political perspectives in The Bahamas until now.

If things continue on this course, we could be in for something violently new in our electoral process; and it will be a direct reflection of our 21st century political leadership in The Bahamas.

Respect should always be our password; and with it – comes responsibility and love for one another. The political disrespect that seems to be out of control in our country today is a part of the wider disrespectful culture that’s slowly tearing us apart.

We cannot be serious about a prosperous future as one people, if we hate one another because - we support different political parties, or we see things differently.

If the invasive contempt for one another continues through the upcoming general election, then - what kind of results do we expect at the end of the day brothers and sisters?

Yes, the assault incident in Grand Bahama this weekend involving a candidate’s daughter, is one worthy of serious note and action. Nip it now or be sorry later.

I have noticed that so called responsible politicians and political leaders in our country are first concerned about winning by hook or crook. Well, Mr. and Ms. politicians, you all better change that outlook before you don’t become a victim of your distorted philosophy.

Let’s all watch and see who will follow Doctor Minnis of Killarney, and denounce all forms of violence in this election season and onwards; because only real leaders will do so.

Step up to the plate brothers and sisters who seek our vote.

Caribbean Blog International

As Bahamians, let’s continue to build a better Bahamas; a nation where at the end of this upcoming electoral process - FNMs, PLPs, DNAs and Independents would work together to forge a brighter future for our young people

Let Calm Heads Prevail

by Hon. Dr. Hubert A. Minnis


The Bahamas is approaching the election season, with numerous events, rallies and even family gatherings. I implore you, to let calm heads prevail during this season. We must remember, that we are all Bahamians and when the election is over, we must all still live together in this Bahamaland. It is not unusual for one home to have individuals who support different political parties but what is unusual for us, is for family members not to support each other, instead allowing political persuasions to affect our family bond.

We must continue to respect an individual’s right to speak, support and vote for the party of their choice, as this is the fundamentals of the democratic process at its best. We must bring out the best in each other; we should practice patience, hospitality and love. We should abstain from mud-slinging and personal attacks on each other because at the end of the day, we all want one thing, a better Bahamas. No one wants to live in a violent, unfriendly environment.

I was saddened by the news of one of Grand Bahama’s FNM candidates, Peter Turnquest’s daughter being attacked presumably by political opponents yesterday. This most unfortunate incident should not happen in our country and I wish her a speedy recovery. It is also my wish that in this Christian society, we would not encounter this type of event again as the election fever heats up.

As Bahamians, let’s continue to build a better Bahamas, a Bahamas where at the end of this electoral process, FNMs, PLPs, DNAs and Independents would work together to forge a brighter future for our young people.

Killarney does not support violence and personal attacks, and I ask all Bahamians to refrain from this destructive behavior.

Mar 18, 2012

In light of the challenges that our economy faces and the general consensus that we must revisit our economic model... it is disturbing to see that little is being said about the proposed fiscal policies of political parties as we enter the heart of the 2012 general election campaign

Confronting the debt crisis pt. 2

by Arinthia S. Komolafe

Last week we explored the effects that monetary policy at the turn of the millennium may have had upon the current mortgage and overall debt crisis.  As several individuals are calling for a further reduction of the discount and prime rates (DR and PR), it is important to note the impact such a move will have on individuals’ credit positions and financial wellbeing.

There is no doubt that the reduction of the DR and PR proved beneficial to the government in that it provided the government with an opportunity to service its debt at a lower interest rate, even though the overall benefits to consumers appears to be minimal.  On the other hand, the reduction of the DR and PR would have negatively impacted some organizations, Financial Institutions (FIs) and the National Insurance Board, as they would have lost millions of dollars in investment income.

In the final analysis, FIs usually win and are rarely dealt the bad hand of the stick in any situation within a credit-driven and consumer society like The Bahamas.  Financial Institutions in response to the aforementioned reduction imposed charges in other strategic areas, increased some of their fees and maintained their rates for consumer loans.  We have witnessed quiet increases in FIs’ fees for transactions such as ATM or passbook withdrawals – service charges on accounts and additional fees were applied to loans in the aftermath of the rate reductions.  A well-known fact is that the ultimate and main loser is usually the consumer who on the one hand receives a ‘supposed’ break on his debt servicing due to the DR and PR reduction, but pays hidden fees and charges on the other hand.

The net effect on the consumer is that he/she ends up paying the same amount and in some cases more to the FIs, which may result in non-performing loans or lost property to foreclosure.  This reinforces the point that an active Consumer Protection Commission ought to be in place to provide checks and balance on behalf of consumers relating to financial transactions among other things.

In addition to providing debt-servicing relief, it is expected that further reduction in the DR and PR should have also provided access to credit at a cheaper rate for individual and business consumers. The positive effect for business owners is that it creates the opportunity for expansion of the business and/or maintenance of inventory levels.  However, it is estimated that approximately one third of commercial banking loans extended to Bahamian companies are in arrears.  If businesses are faced with increased energy and gas costs combined with tax increases in National Insurance, business license fees and other diverse areas, it becomes less possible for businesses to be sustained during the current economic climate and more importantly create jobs that will help stem the growing unemployment rate.

The likelihood of FIs extending credit under already constrained circumstances is lower than normal and the underwriting of new loans is being done with extreme caution – a prudent course of action.  This further emphasizes and highlights the importance of and the urgent need for a functional and effective credit bureau.  It is noted that the Central Bank of The Bahamas had obtained assistance from the Caribbean Regional Technical Assistance Center (CARTAC) with the aim of establishing a credit bureau, albeit the process has been ongoing for a few years.  Considering the history of adjustments to the DR and PR, these rates are normally revised (downwards for the most part) not more frequently than in five-year intervals.  Whereas this does not suggest that monetary policy should be stalled or be predictable, the historical trends suggest that there is ample time to establish a credit bureau prior to any potential adjustments to the DR and PR.

What are the fiscal policies of the political parties?

In light of the challenges that our economy faces and the general consensus that we must revisit our economic model, it is disturbing to see that little is being said about the proposed fiscal policies of political parties as we enter the heart of the general election campaign.  It is a well-known fact that during the election campaign seasons in the past, we have heard politicians produce their grand ideas of what they intend to do for the Bahamian people.  The important part of the equation is, however, often omitted and very rarely if ever do we hear about how they propose to ‘foot the bill’ for their grand but necessary ideas.

It seems inevitable that the next government post the 2012 general election will have to continue this spate of borrowing at least during year one of governance to ensure the government is able to meet its obligations.  Fortunately, government debt servicing has been aided by one-off payments in 2011 from the sale of the Bahamas Telecommunications Company and capital inflows from Baha Mar. However, the likelihood of similar capital injections for 2012 is slim.  A part from a significant turnaround and increase in tourism numbers and the government’s ability to constrain its spending habits, it is difficult to see how we will get ourselves up out of this national disaster.

Our politicians seem to have mastered the art of avoiding reality and failing to inform us that hard decisions will have to be made.  In essence, austerity measures are not unforeseeable and it could be argued that these measures are unavoidable.  Of course such declarations are unpopular (albeit they would be truthful) and politicians fear the potential backlash of such honesty.  The government has continued to borrow in the midst of declining revenues and increased taxes that placed a heavy burden on the Bahamian people.  It would not be surprising, therefore, if the current tax levels are maintained or increased to meet budget requirements.  Unfortunately, the persons most affected by these tax burdens form part of the working and shrinking middle classes.  In the absence of foreign direct investment or new sources of revenue, any reduction in taxes will most certainly require the government to carry out extreme measures to cut its spending, increase the efficiency of state-owned enterprises to stop wastage and implement efficient tax collection policies.

The national debt crisis constitutes an unwanted and unsolicited gift to future generations of Bahamians that threaten their opportunity for economic prosperity.  This crisis and prevailing macroeconomic indicators makes it difficult to see any significant economic growth in the near future.  Our leaders and all of us must rise above the partisan politics and make a concerted effort to place our economy back on track.

 

• Arinthia S. Komolafe is an attorney-at-law.  Comments can be directed at: arinthia.komolafe@komolafelaw.com

Confronting the Bahamian debt crisis pt. 1

Mar 15, 2012

thenassauguardian

Caribbean Blog International