By NATARIO McKENZIE
Tribune Business Reporter
THE former Bahamas Mortgage Corporation (BMC) chairman yesterday said the newly-elected Christie administration's goal of building 1,300 new houses over its five-year term was "probably unachievable", suggesting it should instead focus on continuing to reduce the Corporation's 35 per cent loan arrears rate.
Dr Duane Sands told Tribune Business he was doubtful the BMC would be able to finance the aggressive housing initiative proposed by the newly appointed-housing minister, Kenred Dorsett, questioning: "Where is the money going to come from?"
Mr Dorsett, the minister of the environment and housing, recently said more than 1,300 government homes were expected to be built over the next five years.
But Dr Sands told Tribune Business that while the Bahamas Mortgage Corporation's financial standing had improved, he was doubtful it would be able to finance that many homes.
He explained: "It is difficult to imagine where the money is going to come from, because the Mortgage Corporation's financial standing - while improved - is not likely going to be strong enough to sustain that degree of new debt.
"If you have a deficit in the national Budget of $500-plus million in just this year alone, the likelihood that we are going to be able to afford any additional spending is going to be unlikely. I find it to be a very aggressive, ambitious and probably unachievable goal."
Dr Sands added: "I don't know where the money will come from. Floating more bonds means now that you have more guaranteed government debt. Unless they talk out of both sides of their mouth, talking about no new taxes and, at the same time, extending the government debt by new spending, I don't see how it is possible."
Dr Sands noted that the Mortgage Corporation's sinking fund is underfunded by millions of dollars. He said: "Serving that bond interest debt and bond maturity debt requires more money than the Mortgage Corporation takes in.
"The money is going to have to come from somewhere, and most likely the money is going to come from the taxpayers in some form or fashion, because the mortgage guarantee fund simply doesn't have enough money in it."
He added: "I have gone on record as saying he 2002-2007 programme was the most irresponsible use of money in the Mortgage Corporation's history. If you want to repeat that now, simply to say you have built so many houses, is unreasonable. Who is going to pay the bill?
"I would encourage them to continue to strengthen the position of the Bahamas Mortgage Corporation by aggressively pursuing some of the policies that have been shown to be effective, and which have reduced the arrears from 40 per cent to 35 per cent, as opposed to throwing caution to the wind."
Attempts to contact Mr Dorsett were unsuccessful up to press time.
June 08, 2012
