From Austerity to Prosperity

The Bahama Journal Editorial



While we have no way of precisely forecasting the future, we are fairly certain that – in the absence of a decisive break with business as usual - things are set to get even harder for a broad swath of our people.

This is so not only because we are so dependent on external forces and sources for most of the jobs that provide good incomes; but also because of the fact that in times past, we just did not produce enough and neither did we have - as a people – any real desire to do more.

Instead, we spent as if there was no tomorrow; and we borrowed as if happy days would last for as long as we might have wished.

Today, we know that these were mere illusions; in and of themselves evidence of a dependency that left us vulnerable and open to shock after shock – some of them external and others terrifyingly internal.

And so today – and therefore to the nub of today’s argument – we note that, we must – if we are to weather the storms ahead, work harder, produce more and in so many other words, we have to give value for money.

Evidently, the fact of the matter in today’s hard-pressed Bahamas is to the effect that, Bahamians are slowly but surely coming to the realization that they will be obliged to work harder, study more, get more training and otherwise become more competitive if they hope to make it.

Here we note how Prime Minister Hubert A. Ingraham some time ago framed the issue at hand. In this regard, the nation’s chief admonished, "We must never lose sight of the reality that as the world’s economy shrinks, competition increases…”

And so, we can decide to match the competition, out-distance it or fall behind. Put simply, we are in a fight that will determine whether we get out from under our troubles and woes or if we are to fail utterly.

Simply put, if we are to find our own unique road to success, we must demand far more of ourselves and a great deal more of our leaders.

This is surely the way to go if we are to negotiate our way past austerity road; that path that invariably precedes the broad vistas that come with prosperity.

Here we would posit that, the time is nigh for the Bahamian people to realize that the world in which they live, work and where they might prosper, remains one that rewards productivity and creativity.

And for sure, while foreign directed projects like Baha Mar are obviously appreciated, Bahamians must do more for themselves.

Here they are called upon to do so by working harder, remaining sober, becoming more diligent and otherwise, giving appropriate value for money received.

While much of this is easier said than done and while some others might dither and others dawdle, clearly things are currently going from bad to worse.

We need merely refer to some of the grief some small employers are obliged to experience as they try to keep their businesses afloat.

Utility costs are high; so is the price of labor.

There is little to no commensurate value coming the employer’s way – this due to the fact that labor is expensive, often incompetent and just as often, simply unavailable.

This and more information just like this serves to underscore the urgency in the moment for all hands to be put to work if things are going to be kept together.

They must become more productive.

Clearly then, it is this question of productivity that cuts to the heart of that matter which turns on whether the Bahamas has what it takes to compete in the region and in the wider world.

Sadly, the answer must be in the negative.

This neatly explains how it now arises where in certain large enterprises, workers are being routinely ‘thrown overboard’ in efforts to help staunch this or that firm’s money-hemorrhage; thus the emergence here of late of that rising ocean of unemployed and underemployed Bahamians.

And so we would respectfully suggest that –if only at this juncture - we just do not have what it takes to compete with nations that have vast numbers of disciplined workers – men and women who work well and hard – and who do have what it takes to create value.

Here discipline is the key.

When and where workers are disciplined, well-educated and properly trained they become a nation’s most valuable resource.

Contrariwise, when and where they are neglected or denied education and training, they become social parasites; this in turn, exposes them to lives of misery and want.

And so, as night follows day, we must – if we are to survive in this brave new world – work smarter, produce more value and otherwise demonstrate that we can compete in that global economy where the mantra remains, compete or perish.

December 05, 2011

The Bahama Journal Editorial

Bahamas Blog International

All Hands on Deck

The Bahama Journal Editorial


Certain high-ranking International Monetary Fund officials are today convinced that, “Although the outlook [for the Bahamas] is fraught with uncertainties and risks, the mission is confident that the resolute adherence to fiscal consolidation and an enabling investment climate will foster a stable macroeconomic environment and support sustained economic growth.”

We concur.

But even as we express our overall agreement with the IMF’s analysis; we are constrained to note that, we should – as a matter of both principle and policy – do all we can as to further empower our people; and to see to it that, growth and development is powered from both the inside and outside.

Such an addition of an endogenous dimension of development to the current policy mix would go a long way to helping Bahamians help each other.

Such a double-barreled approach to national development would – of necessity- push leadership in the direction of seeing to it that our most precious resources- here namely our youth are put to the most productive use possible.

Here our churches, unions, businesses, other civil society agencies – and the government are called to pull together in the interest not only of their membership; but in the interest of all to put the Bahamas on a path to sustainability.

And so, whether the reference made is to tourism, banking or the industrial sector, each and every one of these clearly has a stake in a vibrant, healthy, development-oriented Bahamas.

But just as clearly, we must break with business as usual.

Were we to do so, we would wake to find that, while things are tough; and for sure, while moving forward, things might get even tougher; we are ever optimistic.

We are buoyant not only because we know that, this period of austerity is one where those who stick it out will reap their fair share of rewards; but also because it is precisely in times like these –that is to say, days of creative destruction – when you either sink or swim.

For our part, then, while these are days of tremendous struggle, we are convinced that, the worst is over; and that, in the fullness of time – better days will come.

But even as we note that these so-called better days are ahead; we know it for a fact that, we must –like others in the mix- do our level-best to help make some of these things happen.

And for sure, we are also absolutely convinced that, the time is nigh for all of this nation’s right-thinking Bahamian sons and daughters to cease from their time-tested habit of sweating the small stuff; that is to say, their socially pernicious habit of making too much of the already too-little that divides them.

Happily, while this habit does persist – and might yet continue – we are happy to report that, this country that is ours continues to get kudos for the conservative manner given by all who govern to the economic affairs of this land that is ours.

Some of these kudos routinely come from world agencies such as the International Monetary Fund. In this regard, we now note some of what the IMF has had to say about the management of things in this period when austerity is the word that apparently matters most.

The team met with senior government officials and representatives of the private sector. At the end of the visit, Mr. Gene Leon, head of the IMF mission to the Bahamas, issued the following statement: “The global crisis of 2008-09 had a profound impact on the Bahamian economy. Tourist arrivals declined by 10 percent and foreign direct investment fell by over 30 percent, leading to a sharp contraction in domestic activity and a large rise in unemployment.

“However, lower import prices helped narrow the external current account deficit to about 12.5 percent of GDP; this together with external borrowing and the one-off allocation of Special Drawing Rights helped raise gross international reserves to about 2.5 months of imports, boosting support for the exchange rate peg…”

There was even more. Here we are led to believe that, “… Gross international reserves are projected to increase despite the higher oil prices owing to strong private capital inflows, including from Foreign Direct Investment…”

While this is not to be ranked at the optimal level, we do have some modest reason to be happy that ventures like Baha Mar are on stream.

And as Gene Leon aptly notes, “…Going forward, the authorities have indicated a commitment to maintain prudent macroeconomic policies, including fiscal measures to reduce the rising debt-to-GDP ratio and a monetary policy geared to supporting price stability and the US dollar peg… They also plan to continue with reforms to improve tax administration, increase fiscal responsibility, and transparency.”

Evidently, then, even if things were to turn out as suggested by the IMF; there would still be work [at the endogenous level] that could and should be done by Bahamians.

December 23, 2010

The Bahama Journal Editorial

Bahamas Blog International

The Bahamas Government 2010/2011 Budget: Bahamians Under Pressure

Bahamians Under Pressure
By IANTHIA SMITH:

From as little as shelling out more money at an Automatic Teller Machine (ATM) to as high as coughing up additional thousands of dollars in stamp taxes on a dwelling home or property, beginning today, Bahamians will have to put a tighter squeeze on their wallets to keep their heads above water.

Today marks the start of the 2010/2011 fiscal period, a 12-month roadmap that ushers in a rash of budget cuts, higher taxes, a freeze on hiring and promotions and in some cases, salary decreases.

But despite the firestorm of criticism that has followed the $1.8 billion budget since its introduction in Parliament several weeks ago, Prime Minister Hubert Ingraham has maintained that it is the best the government could have done under the present economic climate.

However, the Progressive Liberal Party (PLP) would tell you an entirely different story.

The Opposition argues that a part from the global economic downturn, the government’s poor fiscal management has much to do with what the country is now up against – mounting expenses and little revenue.

"This is one of the worse (budgets) for all Bahamians.  The budget communication does nothing to critically address this critical and urgent need which continues to have far reaching economic, social behavioural consequences for the people of The Bahamas," Opposition Leader Perry Christie told members of the media at the time.

"This is a tax and pain budget. It is the prime minister singing a sad story as he describes the problems, but without any ideas about how to grow us out of this crisis and without accepting any responsibility for the state we are in under his stewardship."

But according to Prime Minister Ingraham, in order to bring relief to the country, the government had to make some tough decisions and the majority of those decisions come into play today.

These include stamp tax on realty transactions that have been increased by two percentage points.  Stamp tax on bank transactions have been hiked by 15 cents and the air and sea departure taxes have jumped by $5.

In the case of cruise ships, the increase takes effect October 1.

Starting today, hotel room taxes will jump by 10 per cent of the room rate, while the annual fees payable by retail banks have increased by a whopping 50 per cent.

Car licensing fees, the rates on spirit and beer manufacturing and fees under the International Business Companies Act also went up.

If all went as planned, New Providence residents would have also had to shell out money for garbage collection services beginning today.

However, negotiations for the privatisation of solid waste management stalled.

With the increase in taxes, came dips in salaries and ministerial portfolios.

Freezes were even placed on hiring and promotions in the public sector, except for essential services, like police and defence force officers, teachers and nurses.

Budget allocations for the majority of ministries and departments took a nosedive.

The government has allocated some $1.55 billion for recurrent expenditure and more than $265 million for capital expenditure.

But as bad as it might seem, the Ingraham administration is not alone in trying to restore the country’s ravaged public finances over the next 12 months.

Countries like the United States, Germany and Britain have also made drastic cuts across the board.

In an "emergency budget" Britain’s Treasury chief George Osbourne unveiled "the toughest cuts to public spending in decades, which saw welfare payments and spending programmes slashed.

Mr. Osbourne said the austerity package was necessary to make "quick cuts to crippling national debts racked up during the global financial crisis.

July 1st, 2010

jonesbahamas