Post Mortem of the 2012 General Election

By Dennis Dames


We have had two one-term governments in a row; which is a reflection of the shifting political times in The Bahamas - in my view. The Bahamian electorate is clearly more aware and wiser, and we hold those who seek to represent us to a higher standard than yesteryear.

This is no longer about Puppy love for the FNM or PLP, or the irrational support for any other; rather, the people simply want good governance and a healthy and prosperous future for themselves, their children and country.

The new Progressive Liberal Party (PLP) government should not allow their recent landslide victory to cloud the genuine wishes of the masses. We demand an environment where we could support ourselves and family, as the majority of us are not for hand-outs or political charity.

It’s all about pleasing the employer before another general election season comes. Delivering a strong and all-around job environment is absolutely essential to the present government’s possible second term success; and so is the significant reduction in crime.

Indeed, low unemployment numbers and a much more peaceful and respectable environment are totally necessary for the politically ambitious Bahamian today.

Time will reveal if the Perry Christie PLP administration is up to the task of delivering for the Bahamian boss people who are really serious about a better Bahamas for all citizens.

...does the national budget for fiscal year 2012/13 address the important promises that were made during the recently completed general election campaign?

The Budget: Part I

Consider this

By Philip C. Galanis

On Wednesday past, May 30, the prime minister and minister of finance presented his much-anticipated first budget of the new administration that was elected only two weeks ago.  This week, we would like to Consider This… does the national budget for fiscal year 2012/13 address the important promises that were made during the recently completed general election campaign?

The short answer is that it begins to do so.  However, the extent to which it does is severely constrained by the distressing state of public finances that the Christie administration inherited from the former administration.  In addition, there is a time constraint challenge that significantly factors into what was contained in Prime Minister Christie’s recent Budget Communication.

For the past few terms, when general elections were held in early May of 2002, 2007 and 2012, the usual mid-May budgetary process has been punctuated by a change of government which imposed severe restrictions on the victor because of the very narrow time line between the elections and the required presentation of the national budget.  Therefore, in the absence of a predetermined fixed election date, successive governments should make a deliberate effort to avoid holding general elections in May because of the constraints that this event places on the implementation of a national budget designed to address the victor’s national agenda.  More about that at another time.

The state of public finances

It is now becoming increasingly evident that the former FNM administration that has always claimed to be a government of accountability and transparency has been neither. An early indication of this was first observed in the Ingraham Administration’s deliberate negligence to submit its customary and much anticipated mid-year budget report earlier this year.  It can be reasonably surmised that the former prime minister and minister of finance consciously decided to forego this practice in 2012, which he himself introduced with much fanfare and consistent conformity, for purely political reasons.

The former prime minister and his Cabinet clearly realized that if they honestly reported the state of public finances at mid-year, their deplorable financial performance would have been received with shock and awe by the Bahamian citizenry.  In the run up to elections, an honest report would likely have brought about an even more devastating outcome at the polls, and therefore, presumably, the FNM government took a conscious decision to withhold such reporting from the public, hoping that the public would place the lack of a report in the “no news is good news” category.

Another example of the FNM government’s willful refusal to report on the true state of public finances pertained to the New Providence road works, which the Public Accounts Committee, under the chairmanship of the Hon. Dr. Bernard Nottage, revealed had incurred a budget overrun of nearly $100 million.

A third instance of the FNM government’s lack of accountability regarding public finances was exposed in the current prime minister’s communication last week when the latter reported the horrendously high and historically unprecedented total deficit for 2011/2012 which rose to a record level of $570 million versus an approved total deficit of $314 million, an increase of $256 million or 82 percent more than was originally anticipated.  In line with the International Monetary Fund Government Finance Statistics (GFS) concept, the GFS deficit, which is the total deficit less debt redemption, for 2011/12 is projected to result in $504 million or 6.3 percent of gross domestic product (GDP). This is double the 3.0 percent that was presented by Mr. Ingraham as the forecast in last year’s Budget Communication.

Finally, the FNM government’s legacy to the national debt is equally disappointing and extraordinarily dismaying.  The national debt increased from $3 billion to $4.3 billion during its term in office from 2007 to 2012, an increase of 40 percent in five years.  This represents an historically high debt to GDP ratio of 56 percent.  Because of this inherited unparalleled GFS budget deficit of $504 million for 2012, the Christie administration will have to borrow an additional $504 million in order to pay off the financial excesses of the Ingraham administration.

The national debt will therefore increase to $4.8 billion by the end of the next fiscal year. But it gets worse. Again, because of the excessive commitments and spending of the Ingraham administration, all things being equal, and barring any unforeseen catastrophic developments over the next two years, given a projected record GFS deficit of $550 million for fiscal year 2013/14, is anticipated that the national debt will increase to well over $5.4 billion by 2014. This will represent a disastrously high debt to GDP ratio in excess of 60 percent.

All these unmatched and unequalled negative performance measures that the government inherited were incurred by an FNM government that frequently and triumphantly trumpeted its commitment to good governance, fiscal prudence, sound financial management, accountability and transparency in public finances.

It is fair to say that so-called good governance, fiscal prudence, sound financial management, accountability and transparency in public finances notwithstanding, Mr. Ingraham and his FNM Government have unquestionably left Mr. Christie and his government in a financial pickle.

Promises to keep

In spite of the alarming news, the Christie administration is still very determined to implement its agenda as articulated in its 100 day promises, the Charter for Governance, the Speech from the Throne and the Budget Communication.  While it will be enormously constrained by the fiscal realities that it has inherited, the new government has set about delivering on the social contract that serves as a basis of the mandate it was given on May 7.

It will be important for the new government to regularly give the Bahamian people an open and candid account of its stewardship over the next five years if it hopes to break the recent trend of one-term governments.

Conclusion

Next week, we will examine how the new administration’s budgetary provisions plan to remain true to its pledges to an impatient and hurting populace whose expectations for relief and renewal are extremely high and to what extent the national budget for 2012/13 will seek to meet those high expectations.

Philip C. Galanis is the managing partner of HLB Galanis & Co., Chartered Accountants, Forensic & Litigation Support Services. He served 15 years in Parliament.  Please send your comments to: pgalanis@gmail.com

Jun 04, 2012

thenassauguardian

The Budget: Part II

The Government's own projections show its direct debt standing at 50.6 per cent of GDP, or $4.057 billion, as at end-June 2012... ...then increasing to $4.607 billion, or 54.5 per cent of GDP, by the close of the 2012-2013 fiscal year

National Debt To Exceed $5bn By Mid-2013



By NEIL HARTNELL

Tribune Business Editor

THE Bahamas' national debt will breach the $5 billion mark before the end of the upcoming 2012-2013 fiscal year, the Government's Budget projections disclosed yesterday, with the debt-to-gross domestic product (GDP) ratio also surpassing the 60 per cent threshold.

Unveiling what fiscal conservatives would likely describe as 'a horror show', Prime Minister Perry Christie unveiled a projected $550 million GFS deficit for the 2012-2013 fiscal year, a sum equivalent to 6.5 per cent of Bahamian GDP.

Together with the projected $504 million deficit for the 2011-2012 fiscal year, which is set to close on June 30, this means the Government will have to borrow more than $1 billion in just two years to cover both its recurrent and capital deficits.

And the $1.054 billion financing gap does not include debt principal redemption, which is set to total $66 million and $121 million, respectively, for the fiscal years 2011-2012 and 2012-2013. Together, that adds a further $187 million to the fiscal deficits, taking the gap between revenues and spending over the two years to $1.241 billion.

The Government's own projections show its direct debt standing at 50.6 per cent of GDP, or $4.057 billion, as at end-June 2012, then increasing to $4.607 billion, or 54.5 per cent of GDP, by the close of the 2012-2013 fiscal year.

Yet this masks the extent of the overall problem, because it does not factor in the $551 million worth of debt the Government has guaranteed on behalf of state-owned Corporations and agencies.

That sum was equivalent to 7 per cent of GDP at year-end 2011. Placed on top of the Government's direct charge, that takes the Bahamas' total national debt to $4.608 billion, or 57.6 per cent of GDP, at June 30, 2012.

And, when added to the projected $4.607 billion direct charge on government at the end of the 2012-2013 fiscal year, the Bahamas' total national debt will hit $5.158 billion - a sum equivalent to 61.5 per cent of national GDP.

And, if the Government's medium-term Budget projections are correct, GFS deficits of $357 million and $272 million in 2013-2014 and 2014-2015, respectively, will take the direct charge to $5.215 billion at the end of the latter period.

Assuming the $551 million in government guaranteed debt remains relatively unchanged, the total Bahamas' national debt will hit $5.766 billion by June 30, 2015, a sum equivalent to 63.3 per cent of GDP.

That indicates the fiscal position will likely continue to weaken despite the improvement generated by positive GDP and economic growth, and also suggests the Bahamas will hit the $5.5 billion debt mark more than a year earlier than the International Monetary Fund's (IMF) 2016 forecast. It also appears that the Government is again relying on economic growth to keep the debt-to-GDP ratio below the 70 per cent the IMF has classified as a 'danger' threshold.

The toll this will exact on the Government's finances, and its ability to fund spending priorities and areas such as education and health, was brought into sharp relief by the Prime Minister yesterday, when he said debt servicing (interests) and debt principal requirements would collectively total $328 million for the 2012-2013 fiscal year - a sum equivalent to 18 per cent of recurrent spending.

Overall, the Budget was pretty much what observers expected, with Mr Christie, as Minister of Finance, performing a delicate balancing act between conveying a message of fiscal prudence and 'holding the line' on the deficit on one hand, while trying to stimulate the private sector and deliver on pre-election campaign promises with the other.

The main 'political battleground' themes surrounding the 2012-2013 Budget were also well-defined yesterday, with the Prime Minister describing the Government's deficit and debt levels, and overall fiscal position, as "much worse than we had anticipated".

Michael Halkitis, his minister of state for finance, went further in castigating the former Ingraham administration for "reckless" spending, particularly during the final months of its term.

He added that the previous government's fiscal policies had "severely constrained our room to manoevere", a signal that the PLP administration will likely lack the financial headroom to implement at least some of its pre-election manifesto promises.

The Opposition Free National Movement (FNM), though, will likely retort that the Government already knew the extent of the Bahamas' fiscal woes, having been fully briefed on the New Providence Road Improvement Project cost overruns and voted on all borrowing/spending resolutions brought to Parliament by the former administration.

It will argue that the Government is simply looking to blame the Ingraham administration, and in doing so, provide a cover for why it is unable to deliver on pre-election promises that the FNM has branded unrealistic.

Still, whichever way it is sliced and diced, the Bahamas' fiscal situation is dire. "The fiscal accounts are in much worse shape than we had expected as we came into office," Mr Christie warned yesterday.

"Indeed, this year's projected GFS deficit outturn is significantly higher than had been forecast by the previous administration last year's Budget communication. The GFS deficit in 2011-2012 is now projected at $504 million, up by a full $256 million from the previous government's estimate of $248 million."

The $256 million overshoot on the GFS deficit is 103 per cent, or more than double, the FNM's 2011-2012 Budget forecast, with the total $504 million deficit equivalent to 6.3 per cent of GDP - an unsustainable level more than double the 3 per cent estimate.

As a result, the Government's direct debt-to-GDP ratio will hit 50.6 per cent at June 30, 2012, as opposed to the 46.2 per cent level projected in last year's Budget.

Mr Christie's presentation, though, indicated that the majority of the GFS deficit overshoot for 2011-2012 was attributable to capital spending set to come in $119 million, or "almost 43 per cent", above target at $399 million - compared to the forecast $280 million.

The Prime Minister said the capital spending overshoot was "due in substantial part to a considerable increase in spending on the New Providence Road Improvement Project".

While faring a little better, the FNM administration also seems set to exceed its recurrent deficit estimates by 54.8 per cent, the projected outturn for 2011-2012 being $257 million as opposed to $166 million.

This, Mr Christie said, was the result of a combination of recurrent revenues "underperforming relative to the forecast" and recurrent spending beating projections at $27 million to hit $1.707 billion. Recurrent revenues for 2011-2012, he added, were set to come in at $1.45 billion, off target by $64 million.

Moving forward, Mr Christie pledged that the Government would move to "redress the unsustainable balance in our recurrent account" through a two-pronged strategy.

This, he said, would involve constraining recurrent spending so it grew in line with the Bahamian economy's growth, and "engineering a transformation of recurrent revenue to bring it to a more appropriate level relative to the size of the economy".

Promising to "hold the line" on recurrent spending in 2012-2013 "to the maximum extent possible", Mr Christie said it was still projected to rise by 6.7 per cent or $114 million to $1.821 billion, compared to $1.707 billion in the last fiscal year.

He added that $55 million of the recurrent spending rise was due "to the increased requirements for debt redemption in the coming period".

As for recurrent revenues, Mr Christie said they were projected to improve to 18.3 per cent of GDP in 2012-2013, up from 18.1 per cent in the current fiscal year. The Government is forecasting an increase from $1.45 billion to $1.55 billion, due to improved collections from Excise Tax and real property tax reforms.

As for capital spending, the Prime Minister said this would remain flat at $400 million in 2012-2013, attributing this to "a large inventory of ongoing projects" - including the $77 million borrowing for the New Providence Road Improvement Project.

May 31, 2012

tribune242

Caribbean Blog International

WE NEED A NEW COMMISSIONER OF POLICE NOW! ... The commissioner of police is a nice man... but he has to go... We need Steven Seymour to take over the police force.... He knows about operations

By Kevin Alcena:





Too much crime that could be prevented. Eight people got shot in a bar one day. Two robberies happened simultaneously today. The police will tap law abiding citizens' phones indiscriminately, yet you tell me they know all of these gangs and drug lords. Look at Cheryl Grant's case. They even wrote a bogus report to serve a political expedience. If they could do it to her what about us. She was a deputy prosecutor. They denied her a place in history. You can't use your cell phones in a free democracy. You need to go on Skype to have private conversations. This should not be happening in the Bahamas in a free democracy. You have to assume that your phone is tapped when you use it.

If the police were doing their jobs they would have known the criminals' whereabouts and could have prevented the shoot out in the bar. We even have the technology to track you by your phone and yet they cannot prevent crime from a counter-intelligence point of view and track the criminals. But they would name and shame innocent citizens and write bogus intelligence reports to serve their purpose. This is sad! The police have solved crimes in the past by locating people by way of cell phones. This country is at war with crime. If we don't resolve it, this will kill our tourist industry. The thugs are illiterate, they are not sophisticated. Let the police make their lives living hell and crime unpopular. We have one of the most intelligent police force. Something is wrong. In an island 21 by 7 miles one can find anyone in Nassau. This is a village, we know where everyone lives and everyone's business. We should be able to stop crime collectively as citizens. It's only a handful committing the crimes, but we need the citizens to assist the police now.

All banks should have CCTV. The government does not need to foot the bill for this. Businesses should be happy to do this. This is a tremendous deterrent to crime throughout the world. This commissioner of police should know how to bring technology to the force because he is technologically savvy.

The commissioner of police is a nice man but he has to go. We need Steven Seymour to take over the police force. He knows about operations. Crime is a direct result of police leadership. Five o'clock and all commanding officers go home. The one who was getting good results they decided to send him to Elizabeth Estates - Supt. Robert Young. The last shuffle was a disaster. They should bring Supt. Lundy from Freeport to run CDU. It was a good move to bring Supt. Pickstock back from Freeport to run Rapid Strike. I am sure the new government had something to do with that. Police are only responding to crime. The most ridiculous comment by the Commissioner in the past was that the murders were drug related.

This island is only 21 miles by 7 miles; we should not even have crime in this country. The priorities should switch. Crimes can be prevented. We know all criminals so why are they not being monitored. We should know where they sleep, eat. Nassau is the tourist mega of the Bahamas.

The previous and current governments have equipped the police force with the most sophisticated equipment to fight crime but they are not applying it. They are only applying police politics.

Therefore, if the government decides to keep the Commissioner of Police, the Minister of National Security must reorganize the entire force operation. The most encouraging thing I was impressed by is the National Intelligence Agency by way of legislation. I have been advocating this for the last 15 years. Thank God it is coming!

I am optimistic that we will win the war against crime, but we the citizens must participate in this effort.

From Kevin Alcena - Facebook

Sebas Bastian, CEO at Island Luck “web shop” applauds the Progressive Liberal Party (PLP) government for its pledge to address the gambling industry ...arguing that regulation will add revenue to the public treasury

Island Luck calls for end to ‘insane’ contradiction

By Scieska Adderley
Guardian Business Reporter
scieska@nasguard.com

The head of a major “web shop” is applauding the Progressive Liberal Party (PLP) for its pledge to address the gambling industry, arguing that regulation will add revenue to the public treasury.

Sebas Bastian, CEO at Island Luck, said the unregulated gambling industry already generates millions for the local economy each year.  Island Luck, he added, pays out million for salaries, rentals and to the National Insurance Board (NIB) for contributions, contributing $20 million to the local economy.

Island Luck and its more than 3,000 employees already contribute to The Bahamas, and to deem the operation illegal is “insane”, according to Bastian.

“The industry cannot continue to only be recognized as legal when we give out to the community, pay taxes, business license fees, national insurance and [when we are] taken to the labor board.  Yet, we are deemed as illegal on the other hand?  To me, that’s insane,” he said.

In last week’s Speech from the Throne, it was revealed that the PLP government would hold a referendum for the Bahamian people to decide whether a national lottery should be instituted and whether web shop type gaming should be decriminalized.

The issue is controversial in The Bahamas.  Some argue that if properly regulated, legal gaming could be a driver for the economy.  However, the Christian community stands against any move to legalize any form of gambling for Bahamians and legal residents.  Visitors can gamble legally in The Bahamas.

Winston Rolle, CEO of the Bahamas Chamber of Commerce and Employers Confederation (BCCEC), told Guardian Business that if the national lottery and/or web shops are properly regulated, a higher level of tax should be paid to the public treasury by the sector.

“In regulating it, persons should also be looking to ensure that funds generated from it are properly allocated and channeled into specific areas where there are significant economic voids,” Rolle explained.

“My concern would be over the proper structure and regulation so that we are setting up a regime that provides adequate tax returns and that whatever funds that are raised will be utilized to the benefit of the Bahamian people.”

Rolle said that at this point, Bahamians are kidding themselves viewing gambling as being illegal.

Another leader in the web shop business was contacted by Guardian Business on the issue of legalizing the sector.  However, the source declined to comment at this time, saying he will meet with the prime minister shortly on the issue.

For Bastian’s part, he said there should be a recognition that the industry has a positive impact on Bahamians.

“For example, when the Atlantis resort decided to downsize its staff, we at Island Luck employed most of those displaced workers.  Currently, we have more than 3,000 people employed,” he said.

“We payout more than $6 million in rental property, $4 million in national insurance contributions per annum and more than $10 million is spent on utilities like the Bahamas Electricity Corporation (BEC) and Cable Bahamas, along with supplies like paper.  The funds generated are spent locally.”

May 30, 2012

thenassauguardian

Caribbean Blog International

Sidney Strachan, the former chairman of the Bahamas Gaming Reform (BGR) committee expressed disappointment in church leaders who oppose a referendum on gambling

Church 'Predicament' Over Gambling


tribune242
 

THE former chairman of the Bahamas Gaming Reform committee expressed disappointment in church leaders who oppose a referendum of gambling – a move he claims places them in a “predicament” with the pro-gambling public.

Sidney Strachan commended the Christie administration over the weekend for sticking to its campaign promise to hold the nationwide poll, as reiterated in last week’s Speech from the Throne.

He said the BGR has long expressed the need for government to review the “antiquated, hypocritical and discriminatory” gaming laws – a view shared by local stakeholders including casino owners and operators and the Bahamas Hotel Association.

Mr Strachan said: “To continue pretending that gaming does not exist and a large majority of Bahamians do not want to participate is ludicrous.

“While one group is permitted to come into our country and game in and own gambling properties, Bahamians are treated as second class citizens and denied the same rights.

“There is something fundamentally and inherently wrong when a foreigner has more rights in the Bahamas than a citizen.”

Mr Strachan said the BGR has been in contact with regulated gaming jurisdictions outside the country and has been advised that the combined economic impact of a national gaming network in the Bahamas could potentially exceed $60 million, and could create as many as 1,500 to 2,000 jobs.

“Bottom line,” Mr Strachan said, “Bahamians want to game and will not stop. However; this hypocrisy must cease. Churches that enforce on its members a tithe and other ‘voluntary taxes’ on all income, legal or illegal, now want to prevent the government from legally taxing an existing enterprise.”

He explained that some churches have said they will accept all money regardless of where it came from – simply because pastors have the authority to “bless” it.

Mr Strachan said: “Gambling is a nationally and internationally accepted legal form of entertainment.

“The Bahamas instead has decided to prohibit its citizens from participating in and owning a key portion of its own tourism product.

“We continue to foolishly conduct business like a banana republic while modern democracies reap the profits from modern gaming networks.”

He noted that the government could use the money raised on schools, hospitals, infrastructure and support programmes – all of which would generate new employment.

Mr Strachan said Prime Minister Perry Christie is doing “the noble and correct thing” by allowing Bahamians to choose for themselves.

“While this is not necessary to change the gaming law, it is certainly a step in the right direction to complete reform and towards creating Bahamian ownership in our country,” he said.

May 29, 2012

tribune242

Caribbean Blog International

Bishop Neil Ellis urges members of the Christian community to “stand firmly” in opposition to the Christie administration’s planned referendum on illegal gambling and a national lottery

Bishop Ellis: Christians must stand firm against legalized gambling

Royston Jones Jr.
Guardian Staff Reporter
royston@nasguard.com

Bishop Neil Ellis of Mount Tabor Full Gospel Baptist Church is urging members of the Christian community to “stand firmly” in opposition to the Christie administration’s planned referendum on illegal gambling and a national lottery, so that “there would not be blood on our hands” if it is ultimately passed.

Ellis was one of several pastors who commented on the referendum promised in the Speech from the Throne read by Governor General Sir Arthur Foulkes at the opening of Parliament on Wednesday.

In its Charter for Governance, the Progressive Liberal Party (PLP) committed to holding that referendum within its first 100 days in office.

Ellis told The Nassau Guardian that while the country might experience some financial gain as a result of regularizing gambling, Bahamian families are likely to suffer in the long run.

He said that in the past, many Bahamian families “lost everything” due to gambling.

He was referring to the Hobby Horse Hall, a horse racing venue where betting was legal decades ago.

“If we vote in favor we may benefit with the country gaining some type of revenue from it but we have people like those a while ago who lose everything and still have to come back to social services and drain the government,” said Ellis.

“You’d effectively be taking revenue in the front door and its goes out the back door. It’s going to be really important for the church community to lay its agenda clearly and concisely on the table so that if this is passed there would not be blood on our hands. But the government in its wisdom wants to bring some resolution to it and I applaud them for it.”

Bishop Reno V. Smith, pastor of Mt. Gilead Union Baptist Church in Eight Mile Rock, Grand Bahama, told The Guardian that while he was pleased the Christie administration thought it “proper and fitting” to put the issue to the Bahamian people, if the outcome was favorable, players of “games of chance” should not be permitted to be a further burden on the government.

“Should those people lose their houses, their homes, their incomes etc., I don’t think they should be allowed as gamblers to go to the Department of Social Services to be sustained by people like me and others who pay taxes,” Smith said.

“If the people decide that they wish to gamble, then that’s up to them. However, I would like to see all gamblers – players of games [of] chance – to be registered so that they would not be a further burden to the taxpayers of this country.”

The issue has been a prickly one for successive governments, as members of the Christian community have strongly objected to any hint of legalizing gambling for Bahamians.

Christian Council Treasurer Bishop Gregory Minnis of New Jerusalem Kingdom Ministries said that although he believes gambling is wrong from a biblical standpoint, he understood why so many people turned to the industry as a means of “pulling in a dollar” in light of the current state of the economy and unemployment.

“We (Christian Council) are strongly against gambling, but if the people speak and they desire for it then we as the church will have to say to our people to be mindful of how you accomplish your goals now, and how you accomplished all that you have before gambling came in,” Minnis said.

He also said that a national lottery would promote organized crime if it were not implemented properly by the government, and could further criminal activity in the country.

He added that the Christian community would be called upon to make its position “resoundingly” clear, and said he believes more people are opposed to legalizing gambling than are those who support it.

May 25, 2012

thenassauguardian

Caribbean Blog International