07112017 business by tribune242

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TUESDAY, JULY 11, 2017

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Christie Govt ‘hid true extent’ of fiscal crisis By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

Former Govt blamed for Moody’s ‘junk’ review

THE Minister of Finance has blamed the Christie administration’s efforts “to hide the true extent” of the Bahamas’ fiscal crisis for Moody’s threat to downgrade this nation to ‘junk’ status. K P Turnquest told Tribune Business he had no regrets about his frank 2017-2018 Budget statement, which revealed that the newly-elected Minnis administration was seeking to borrow $722 million - the majority of which is to cover the $500 million deficit it inherited from the previous fiscal year. Moody’s last week cited these revelations, together with poorer fiscal

Bahamas faces 2nd ‘investment grade’ loss Borrowing costs would rise, but no ‘hedging call’ consolidation prospects, as the key factors behind its decision to place the Bahamas’ sovereign creditworthiness on review for another potential downgrade (see other article on Page 1B). See PG B5

MOODY’S CHALLENGES GOVT’S FISCAL FORECAST By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net MOODY’S has warned the Government it will be “difficult” to slash the fiscal deficit to 1.1 per cent of GDP by 2019-2020, unless it achieves faster economic growth or alters policy. The rating agency, unveiling its rationale for placing the Bahamas’ sovereign creditworthiness under a ‘downgrade review’, suggested that the fiscal consolidation estimates unveiled by the Minnis administration in the 2017-2018 Budget are “optimistic” and may be hard to achieve. Its July 7 ‘credit opinion’ confirmed that the review, which could lead to a second ‘junk’ downgrade for the Bahamas within eight months if Moody’s follows through, was sparked by the dramatically revised fiscal projections unveiled by the new government. Apart from the Minnis administration’s $722 million borrowing forecast, Moody’s said also focused on the $500 million deficit projected for 2016-2017 a figure that represented a $150 million increase on the estimate given by the Christie government’s mid-year Budget just two months prior. “The decision to place the ratings on review was prompted by official statements that the Bahamas’ fiscal position was weaker

Says ‘difficult’ to hit 1.1% deficit for 20192020 Unless faster growth or policy adjustments Backs tax cut delay; warns on NHI spend than previously estimated, and that the Government’s debt ratios will continue to worsen over the coming years,” Moody’s said. “This diverged from our previous expectation that the Government’s debt ratios would stabilise in fiscal 2017, which had supported the Bahamas’ ‘Baa3’ rating and its previously stable outlook.” Moody’s statement made clear that the Minnis administration has its work cut out to regain trust and credibility in the accuracy of the Government’s Budgetary and fiscal projections. “The Budget indicated the Bahamas’ fiscal outlook is significantly worse than what we had previously incorporated into our projections,” the rating agency said, acknowledging the impact from Hurricane Matthew. “However, the FNM has also considered revenue underperformance and expenditure slippage under See PG B8

DEPUTY PM KP TURNQUEST

Doctors chief says NHI expansion ‘inexplicable’ By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Medical Association of the Bahamas (MAB) president says it is “inexplicable” that the Government is planning to expand National Health Insurance (NHI) at a time when it claims ‘the cupboard is bare’. Dr Sy Pierre, in a statement to Tribune Business, said it was vital that the Minnis administration determine how NHI “can best provide value for the Bahamian people” - especially if the scheme is ultimately financed by taxation. Confirming that the MAB’s executive council had met with Dr Duane Sands, minister of health, to discuss the scheme, Dr Pierre said that while the new government was trying to move NHI in the right di-

MAB president urges value focus Govt must explain: Were’s the beef?

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ACCOUNTING REFORM KEY TO RESTORE GOVT ‘CREDIBILITY AND TRUST’ By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Government must urgently move to an accrual-based accounting system to regain “credibility and trust” in its Budget projections, a governance reformer said yesterday. Robert Myers, a principal with the Organisation for Responsible Governance (ORG), told Tribune Business that it will be impossible to get a true grip on the Government’s financial position if it continues to operate a cash-based accounting system. Speaking after Moody’s threatened to downgrade the Bahamas’ creditworthiness to ‘junk’ status, Mr Myers said this nation needed to properly execute on a fiscal consolidation plan rather than simply keep talking about it. And he warned that it would be “downright irresponsible” for the Minnis

Offer benefits that must be paid for

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

rection it was not there yet. He added that the model left by the former Christie administration was not fiscally sustainable, and warned that if NHI was not handled correctly it “has the potential of becoming a veritable money pit that will thrust the Bahamas into even greater poverty”. Dr Pierre also contrasted the Government’s criticisms of the NHI scheme while in Opposition with its plans to See PG B6

FREEPORT residents are “incredulous” that the Royal Oasis’s owner has been permitted “to do nothing” with the property for 10 years, the island’s Chamber of Commerce chief says. Mick Holding backed the move by Kwasi Thompson, minister of state for Grand Bahama, to engage Harcourt Developments over its plans for a property that many believe initiated Freeport’s demise when the previous owner walked away

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Accrual basis only way to get grip $234m election quarter deficit ‘obscene’ Governance reformer urges NHI hold

ROBERT MYERS administration to launch more social programmes, such as National Health Insurance (NHI), until the See PG B7

RESIDENTS ‘INCREDULOUS’ ON 10-YEAR ROYAL OASIS WAIT

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Harcourt told: ‘Status quo’ can’t remain Chamber chief agrees on sell or invest Development would be huge for confidence almost 13 years ago. Mr Thompson, in a statement following his meeting See PG B4