Financial crisis “looming large”, says PLP leader

Financial crisis “looming large”, says PLP leader
Opposition Leader Philip Brave Davis (FILE PHOTO)

NASSAU, BAHAMAS – Opposition Leader Philip Davis believes the true fiscal state of the country is worse than the government has reported, warning yesterday a financial crisis is “looming large”.

Davis accused the Minnis administration of grossly mismanaging the country’s fiscal and economic affairs since the VAT increase in May 2018 at a press conference yesterday.

He called for the establishment of a non-partisan Economic Advisory Council comprised of the government; the official Opposition; the business community; organized labour; the church; and civil society.

“The Government’s inability to respond to Hurricane Dorian has revealed a truth that many, who understand the fiscal affairs of the country, have accepted,” Davis said.

“Since the ill- considered VAT increase in May 2018, the fiscal and economic affairs of this country are being grossly mismanaged.”

He continued: “Try as they may to blame Dorian, our fiscal position was in dire straits long before Dorian. The signs and empirical evidence of this mismanagement are clear.”

These signs, he said, include: the collapse of Government’s revenue collection in the wake of the dismantling of a key revenue enhancement initiative; failure to capitalize on low hanging fruit (Flight Information Regime) and more substantively; the refusal to stimulate our economy by putting resources into the hands of ordinary citizens and the absence of a pro-growth economic strategy; the unwillingness of the Government to negotiate new industrial agreements with the various public service unions despite the rising cost of living; a reluctance of the Government to aggressively consider increasing the minimum wage although its own tax policy increased inflation dramatically; the non-payment to vendors/contractors and to companies owed legitimate VAT refunds; and the breaching of numerous contracts with service providers without just compensation.

According to Davis, revenue collection targets were missed by $230 million or 8 per cent in the last fiscal year and the Government has now projected a similar outcome for this fiscal year.

“We believe this figure is grossly understated as, last year, the Government benefited from no natural disasters, the full opening of Baha Mar and the best tourism season for stop- over visitors since the financial crisis of 2007/2008,” Davis said.

“Our internal analysis places revenue collection at 12-15 per cent or roughly $400 million below the budgeted amount since tax exemptions would negate expected tax revenue from the increased economic activities from the rebuilding efforts in Abaco and Grand Bahama.”

Davis went on to label the Fiscal Responsibility Bill as “a sham”, noting that as the fiscal and economic situation of The Bahamas are dire and demand immediate action.

He recommended the establishment of a non-partisan Economic Advisory Council comprised of the government; the official Opposition; the business community; organized labour; the church; and civil society.

“This Economic Advisory Council would be mandated to take a critical look at the fiscal and economic state of this country and agree a social contract designed to provide binding guidelines for expenditure, revenue, wage and pension reform policies over the next 5 years. This is a perilous time for The Bahamas as the Government has proven itself incapable of managing the economic and fiscal affairs of this country,” said Davis.

“No amount of hubris, arrogance or grandstanding by the current Minister of Finance can change this reality. It would be incredibly selfish and unpatriotic of me and my political colleagues to watch and do nothing as this administration through sheer incompetence drives this country over a fiscal cliff.

“The Government’s creditability as a party to any financial transaction, domestically or internationally, depends heavily on the creditability of its fiscal accounts and this Government has fallen far short of acceptable standards. Therefore, an agreement to this proposal by the Government must also mean a true commitment to fiscal transparency.”

Davis said he wants the economic council established ‘forthwith’.

“We think we are on the fiscal cliff and falling. That council would be the safety net to try to cushion that fall and point us in the right direction. There is a financial crisis that is looming and looming large,” he said.