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WEDNESDAY, JANUARY 19, 2022
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‘Expect hardship’ from inflation, interest hikes By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net A FORMER finance minister yesterday warned that “every family can expect hardship” from rising inflation that will exceed the current 7 percent rate in the US. James Smith, also a former Central Bank governor, told Tribune Business that The Bahamas will likely see “US inflation rates-plus” due to its consumption-based tax system that will exacerbate the impact of a sustained rise in the cost of goods and services imported from the country’s northern neighbour. And, with the cost of living increasing, and living standards and disposable incomes falling, he warned that an “already depressed” economy could come under further pressure from workers demanding salary increases that keep pace with inflation. Strikes and work stoppages could result if unions fail to get their way, Mr Smith
Sir William’s son hits back in $144k dispute By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net A SON of the late Sir William Allen yesterday denied that his father owed a $144,000 debt to a local businessman, and argued that any obligation to repay hinges on a “deal” that has not ANDREW ALLEN yet closed. Andrew Allen, an attorney by profession, alleged to Tribune Business that the sum claimed by Tony Myers, who previously held leasehold rights to Ocean Cay for aragonite mining before it was taken over by Mediterranean Shipping Company for its private cruise port, was an “investment” as opposed to a loan made to the former Bahamian finance minister. Refuting Mr Myers’ assertion that the $144,000 was a past due and “outstanding” loan due to him, Mr Allen countered that the disputed sum was instead an investment by the businessman in efforts by Sir William, himself and others - who he declined to name - to obtain title ownership to the 163-acre Crab Cay island in the Abacos. Mr Allen said efforts to obtain title via the “quieting” process, and then develop and/or sell the island, had become bogged down after local TV/radio personality and activist, Rodney Moncur, had filed an “adverse possession” claim on behalf of two of his aunts alleging they had ownership rights to land on Crab Cay. Sir William’s son said Mr Moncur had initially agreed to work with himself and the others to sell and develop the island, located north of Green Turtle Cay, but then had second thoughts and backed away from the deal. As a result, efforts to “quiet” title on Crab Cay have stalled and, as a result, Mr Allen and his late father’s estate are arguing that any obligation to repay Mr Myers has not yet been fulfilled. Pointing out that the Supreme Court legal battle is still ongoing, with Mr Myers having been given 21 days by Justice Ian Winder to submit a revised claim, Mr Allen said the only decisions taken thus far were to remove himself as a defendant and strike out the businessman’s demand that Sir William’s estate pay him $66,000 in interest on the basis that this was “usury”. And Mr Allen also took exception to Mr Myers’ description of the relationship he had with the late Sir William. The businessman had told this newspaper that “Sir
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Government need to tap the capital markets again. Simon Wilson, the Ministry of Finance’s financial secretary, told Tribune Business last week that it was “too early to say” how inflation and the anticipated Federal Reserve response will impact the Government’s financial position and borrowing plans to cover the 2021-2022 and upcoming deficits. The Davis administration had pushed back the $800m international bond issue left by its predecessor to the second half of the current fiscal year, and Mr Wilson said no decision has yet been take on whether
JAMES SMITH to proceed with it in a climate where The Bahamas (taxpayers) will likely have to pay more for debt capital. “It’s still under consideration,” he added of the $800m bond. “If market conditions improve we will probably do it. It depends on market conditions and the advice we get.” As for inflation, Mr Wilson said the Government and wider economy would simply have to “adjust” to it was “part of an
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COVID food initiative had ‘highest level of integrity’ By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE probe into the $51m COVID food assistance initiative will conclude that taxpayer funds were “used to the greatest effect” if it is unbiased, a governance reformer asserted yesterday. Matt Aubry, the Organisation for Responsible Governance’s (ORG) executive director, told Tribune Business that the National Food Distribution Task Force and non-profit groups that used government monies to feed thousands of Bahamians at the pandemic’s peak operated with “the highest level of integrity”. Speaking from the vantage point of a group that was involved with the Task Force and feeding programme’s creation, and worked “to ensure things were done above board” in how the COVID food programme operated, he said all groups involved
NIKITA MULLINGS
GB Power’s ‘major cash flow constraint’ warning
• Ex-finance minister: ‘Every family’ will feel effects • Predicts Bahamas to see ‘US-plus inflation’ rates • Wage pressures could lead to strikes, stoppages said, with pay rises possibly further fuelling inflation. The ex-minister of state for finance added that the Government’s already-delicate fiscal position also faces “some serious headwinds ahead” if the Federal Reserve, the US central bank, tightens monetary policy as forecast via a series of three to four short-term interest rate hikes in 2022. This, Mr Smith said, could result in increased debt servicing costs for any part of The Bahamas’ $4.5bn US dollardenominated debt, while also increasing the interest burden on any new issuance should the
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MATT AUBRY had “tremendous respect for the public’s funds and the need to use them to the greatest effect”. The ORG chief voiced disquiet that the Government had released partial and incomplete findings of an audit into the COVID food assistance initiative, adding that it was “hard not to come to that conclusion” that the weekend disclosures by the Prime Minister’s communications director were designed to distract from the
• Lower electricity rate hike to ‘slow down’ reinvestment • Says 42% of households to see bills rise by ‘under $1’ • Cuts recovery of Matthew restoration costs to fit flow By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
controversy surrounding the Dubai trip. Mr Aubry said members of the Task Force, and non-profits such as Bahamas Feeding Network, Hands for Hunger, the One Eleuthera Foundation and the Red Cross, would likely welcome scrutiny from an objective audit as they had nothing to hide over how taxpayer funds were used and the programme managed. And, while arguing that the findings could provide The Bahamas with invaluable lessons on how to respond better in future emergencies, he urged that politics be kept out of the evaluation and its findings. Confirming that ORG had played a role in ensuring the Task Force had the resources and structure that was up to the task, Mr Aubry said: “They scaled up pretty quickly to meet a need that was far beyond the Government’s capacity. This was a new entity that came forward, and
GRAND Bahama Power Company yesterday said it will suffer “a significant cash flow constraint” after it was granted just 53 percent of the base electricity rate increase it was seeking. The island’s sole utility-scale provider, in e-mailed responses to Tribune Business questions, said as result it will have to cut operational costs and capital investments, “particularly in 2022”, with planned network infrastructure upgrades “slowed down” and delayed. Acknowledging that “no one wants to see rates increase”, GB Power nevertheless said its approved base rate rise will have no impact on the 20 percent of residential consumers who consume the least energy. And those using between 201 and 350 kilowatt hours per month (kWh) will see an increase of just “1 percent or less” when the hike takes effect from April 1, 2022. Making the case that its revised base tariff will result in an almost-negligible increase to households’ electricity bills, GB Power told this newspaper that “the average residential customer” would see a $3.50 increase in their monthly energy costs. And 42 percent will see a rise of “less than $1 per month”. The utility said the Grand Bahama Port Authority’s (GBPA) decision, as its regulator, to grant an average base rate increase of 3.3 percent, as opposed to the 6.3 percent hike originally sought, will cause short-term issues when it comes to generating sufficient cash flow that will allow it to reinvest in upgrading its network assets. “The rate review process was rigorous and pushed us hard to examine ways in which we could reduce costs,” GB Power told Tribune Business. “The reduction to 3.3 percent by the regulator will cause a significant cash flow constraint,
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Digital payments player sees off Sebas seizure By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net A BAHAMIAN digital payments provider has successfully fought off a bid to seize control of its operations by fully repaying the debt owed to Sebas Bastian’s investment house. Justice Ian Winder, in a January 13, 2022, verdict, confirmed that Investar Securities had sought to “withdraw the entire action” it brought against Sun Island Transfers, which trades as Sun Cash, after the latter made “full payment of its outstanding indebtedness”. “In my view there is nothing further to be obtained in the action, and it must be withdrawn or otherwise dismissed,” the judge added. “The plaintiff [Investar], having accepted the
SEBAS BASTIAN sums owed to it, there is no likelihood of the appointment of a receiver over the assets of” Sun Cash. Justice Winder also ordered that Investar Securities pay Sun Cash’s legal costs associated with a June 30, 2021, verdict in
which Judge Winder ejected the investment house’s attempt to have Philip Galanis, the HLB Galanis & Company managing partner, appointed as interim receiver/manager for the digital payments provider. No figures were provided for Sun Cash’s debt repayment, or how much it won in legal costs. Barry Malcolm, Sun Cash’s principal, declined to comment on this when contacted by Tribune Business yesterday. It is understood that the debt was repaid via cash flow rather than any new investor buying into Sun Cash. Investar, which is the investment and financial services arm of Mr Bastian’s Brickell Management Group (BMG), had originally sought to convert a loan made to Sun Cash into a 49 percent equity ownership
interest in the well-known electronic payments solution provider. However, its plans were scuppered by the Central Bank of The Bahamas, which refused to approve Investar’s ownership move on the basis that it would violate “their policy of excluding gaming-related entities from the money transmission business”. The “gaming” reference alludes to Mr Bastian’s ownership of the Island Luck web shop chain, which is widely regarded as the domestic market leader. The Central Bank also mandated that Sun Cash seek a new investor to acquire that 49 percent shareholding by yesterday. However, undeterred at being thwarted by the Central Bank, Investar just one month later sought the Supreme Court’s
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