WEDNESDAY, AUGUST 24, 2016
business@tribunemedia.net
Contractors not joining ‘celebration bandwagon’ over Baha Mar deal yet
Baha Mar creditors: Over 90 per cent to be paid By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
CCA contracts to be paid, but not Baha Mar’s
Baha Mar’s secured creditor agreed to fund the $3.5 billion project’s completion because potential purchasers have told it they will not buy an unfinished mega resort, with more than 90 per cent of local creditors set to be paid. Sources familiar with the agreement between China Export-Import Bank and the Government, speaking on condition of anonymity, conformed that the former had been forced to reverse its earlier position of not investing a further cent
Association chief ‘cautious’ amid wait for details Private sector hailed deal not knowing specifics
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net and NATARIO McKENZIE Tribune Business Reporter nmckenzie@tribunemedia.net Bahamian contractors yesterday said they were “not joining this bandwagon of celebration” over the Government’s Baha Mar agreement just yet, amid suggestions contracts held directly with the former developer may not be honoured. Leonard Sands, the Bahamian Contractors Association (BCA) president, told Tribune Business that the group was being “cautious” over its response and what it told members, given that so many details were unknown. He added that there was “vagueness” in the Prime Minister’s announcement of the agreement with the China Export-Import Bank to complete Baha Mar’s construction, with no specifics provided on how much Bahamian contractors can expect to be paid, who will pay it, and when. A total $74 million was said to be owed to some 123 Bahamian contractors when Baha Mar was placed into Chapter 11 bankruptcy protection in June 2015, and Mr Sands said the BCA Board was meeting last night to disSEE PAGE B5
Baha Mar buyers not interested in incomplete resort Gov’t-China agreement ‘not pie in the sky’
into Baha Mar. “There weren’t any buyers interested in buying an unfinished building,” this newspaper was told bluntly, thus forcing China ExportImport Bank’s hand on the construction financing. Tribune Business understands, SEE PAGE B6
Moody’s backs IMF over Bran ‘concerned’ taxpayers to fund $100m fiscal deficit overshoot Baha Mar payouts By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
‘No doubt’ Chinese tax breaks will pay creditors ‘Amazed’ CCA getting ‘second bite at apple’
Asks if announcement timed to ‘deflect’ downgrade By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net The DNA’s leader yesterday said he was “very concerned” that Bahamian taxpayers will ultimately be landed with the multi-million dollar bill for compensating Baha Mar’s creditors via the tax incentives granted to the Chinese. Branville McCartney told Tribune Business he had “no doubt” that the China ExportImport Bank and China Con- BRANVILLE MCCARTNEY struction America (CCA) had received extra investment concessions in return for pledges to pay unspecified sums to Baha Mar’s unsecured creditors. Describing CCA as “the real winners” from the Baha Mar debacle, Mr McCartney said he was “amazed” that the Chinese state-owned construction company was getting “another bite at the apple” despite the allegations of ‘shoddy workmanship’ surrounding its previous work on the $3.5 billion development. And with the Government providing little to no detail on the Supreme Court-approved agreement struck with the China Export-Import Bank for Baha Mar’s completion, the DNA leader said it was impossible to determine SEE PAGE B4
‘Ball in our lap’ to avoid further Moody’s action Downgrade action decided before Bahamas visit
Chamber chief says nation can’t be ‘defensive’ Expects ‘more positive outcome’ in next reviews
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net The Chamber of Commerce’s chief executive yesterday said responsibility for avoiding a further credit rating downgrade “falls squarely in the Bahamas’ lap”, as he accused Moody’s of having long planned its latest action. Edison Sumner told Tribune Business that private sector executives who met with Moody’s, following the early July announcement of its Bahamas rating review, felt its representatives were merely visiting this nation as “a courtesy”. He himself gained the impression that Moody’s had already decided to “go through with the planned downgrade” of the Government’s creditworthiness, regardless of what it discovered on its Bahamas visit. “The move from Moody’s, though it was disappointing, was not unex-
Contractors, others ‘to do quite well’
Edison Sumner pected,” Mr Sumner told Tribune Business. “In our last meeting with them, we got the impression from them that they were not going to shift any from their intent to provide another downgrade for the country. “By the time they came to see us, we believe they had written their report already, and we believe their visit to the Bahamas was more of a courtesy.” He added: “We tried to speak to some of the positives for the country and stay their hand, and show them why it would not be a prudent thing to continue to downgrade our sovereign credit rating. “We left that meeting with the impression that SEE PAGE B5
Moody’s yesterday backed the International Monetary Fund’s (IMF) prediction that the Bahamas’ 2015-2016 fiscal deficit is set to overshoot the Government’s estimate by around $100 million. The international credit rating agency, in a followup note to world markets following Monday’s downgrade of the Bahamas, forecast that the deficit for the recently-closed fiscal year would be equivalent to 2.9 per cent of GDP. This is some 1.2 percentage points higher than the Christie administration’s revised estimate of 1.7 per cent of GDP, or $150 million. And given that 1 per cent of Bahamian GDP is roughly equivalent to $80 million, the Moody’s forecast suggests the 2015-2016 GFS deficit will come in around $240-$250 million. “We estimate that the deficit reached 2.9 per cent of GDP by the end of fiscal 2015-2016, relative to the estimate of 1.7 per cent presented in the budget,” Moody’s said yesterday. “Given the gradual eco-
Says ‘red ink’ to be 2.9% of GDP, not Gov’ts 1.7%
Rating agency agrees Gov’t forecast too optimistic Adds that Bahamas’ reform progress ‘slow’
nomic recovery, we forecast that the government’s debtto-GDP ratio will continue rising through 2016-2017 and stabilise thereafter as the fiscal deficit continues to decline.” Moody’s forecast mirrors that of the IMF, which in its recent Article IV report warned the Government that its fiscal consolidation projections are “too optimistic”, and that the deficit for the just-closed 20152016 year will be around $100 million higher than forecast. “With weaker than expected growth weighing on revenue collection, the authorities’ plan that seeks to reduce the 2015-2016 fiscal deficit to 1.5 per cent of GDP, and to achieve a near balanced budget by 20172018, appears too optimistic,” the IMF said then. “Staff projections suggest a still significant, but more realistic and growthfriendly pace of consolidation, with the fiscal deficit projected to narrow to 3 per cent in 2015-2016.
“The fiscal deficit is expected to decline further in 2016-2017, albeit at a slower pace, with debt stabilising at around the same time.” Also agreeing with this SEE PAGE B6
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