NASSAU, BAHAMAS — While progress has been made in stabilizing the Bahamian economy post-pandemic, the country is “not yet out of the woods,” a governance reformer has warned, noting that potentially unpopular reforms are needed to help accelerate and sustain the country’s economic growth.
Hubert Edwards, head of the Organization for Responsible Governance’s (ORG) economic development committee, remarked: “Following two years of deep decline due to the Covid-19 pandemic, and an intervening “bounce back” year, 2023 has seen positive economic performance for the country but unfortunately lacking in sufficient potency to seriously start to change our fortunes. The question that looms large, therefore is whether fiscal 2023-24 can continue to deliver the requisite levels of stabilizing effect.
“I would expect the economic performance, especially in tourism, to continue well into 2024; however, the performance of and overall improvement of the fiscal state of the country will demand other intentional actions. Reforms, no matter how unattractive, needed to help accelerate and sustain growth.”
Edwards noted that while the reported $58 million budget deficit for the first quarter of 2023/24 has raised some alarm and the deficit for 2022/23 notably lower than projected at $533 million, both periods should not be seen as a fiscal crisis.
“Such a conclusion would require deeper assessment and analysis. In the grand scheme of things, a deficit of $50 million should be able to attract reasonable explanations. I am, therefore, hesitant to simply make a year-over-year comparison. Explainable and would rather wait for the release of post-quarter information,” Edwards said.
Edwards wrote that there is concern relative to the timeliness of the release of monthly fiscal reports.
“It conveys a message that is open to interpretation and is likely to feed into existing negative credit sentiments. Maintaining this cadence creates the risk that every adverse outcome will become magnified. It must be anticipated that the Ministry of Finance will rectify this important matter,” Edwards stated.
“Progress has been made in stabilizing the economy post-pandemic but we are not yet out of the woods. It is my view that early adjustments may be required to keep the country on the path initially laid out in the current administration’s first “official” budget. It is my view that there must be greater urgency in addressing the areas that are well-known and overdue for reforms.”
Edwards suggested that should the pronounced shift in the deficit hold, the government’s biggest concern in 2024 could be its abilityto marshal and avoid a cash flow crunch effectivelyh.
“Consequently, all efforts which improve or speak positively to the improvement of the country’s creditworthiness should be up for discussion and squarely on the table. This starts with low low-hanging fruits of timely reporting and extends to the more difficult task, if necessary of employing austere measures to contain expenditure. This we readily recognize may become moot if the IMF is wrong. The year 2024 represents a midpoint of the administration’s current term and it is to be anticipated that there will be pressures brought to bear on the delivery of programs and initiatives promised,” Edwards noted.
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