NASSAU, BAHAMAS — The country will soon be forced to acknowledge the “reality of their irresponsible past”, according to a leading businessman.
Robert Myers noted the country’s fiscal imbalance is due to irresponsible overspending and hiring practices of successive governments, during an interview with Eyewitness News.
Stressing that the views were solely his own, Myers said his reflection as to how the country finds itself in the current fiscal straits was not rooted in criticism.
“It is only when we are honest about why we are where we are that we will begin to get better,” said Myers.
“The next national crisis is upon our door step and it can be averted with the right leadership, plan of action, collaboration and the will and determination of the people.
“The reality at this point is, with each crisis the Bahamas endures it is placed ever closer to its fiscal demise. The recent downgrades are telling the people of the Bahamas, loud and clear, that they and their government are not headed in the right direction from a fiscal stand point.”
He said: “To be clear, the fiscal imbalance has not occurred because of one recent crisis or another, it has specifically occurred due to the irresponsible over spending and hiring practices of successive governments over the last 45 years. The decades of uncontrolled deficit spending have eroded any headroom the government, or any administration, should have retained for such disasters.”
Myers argued that the people and not just the governments must take responsibility for this failure, as it is they that select and elect representatives of a party that will form the government.
“Perhaps we must all now be a lot more careful and insistent on who runs and represents us within the political parties,” he continued.
“It is, after all, that process that determines by whom the country is managed and how it’s governed. In the absence of responsible governance, and with no means for the public to hold governments accountable, the system is and remains subject to fail. That must change.
“Prior to this administration, successive governments have done nothing to curb the excessive deficit spending, and all to date have failed to achieve a balanced budget, as such, our debt and debt to GDP continues to reach unsustainable levels. Hence the ratings downgrades.”
According to Myers, one the largest portions of the government spending imbalance comes directly from its failure to understand that poor public education results matter to socio-economics.
“Poor public school education has created an unemployment dilemma, one that is creating under educated employees and not employers,” he said.
“Governments have repeatedly chosen to hide the unemployment problem by over-hiring civil servants to falsely keep the unemployment numbers down and this has created the over-employment problem in the public sector.”
He further noted that education gap and the government’s irresponsible employment practices have created several significant long term problems. Among them he noted is an inflated civil service or public sector which he said is costing the tax payers about 30 percent more than it should.
“This results in higher taxes that increase the cost of business for everyone and make the Bahamas less regionally competitive,” said Myers.
“These excessive labor costs deprive all the public sector entities of critical funds they should be spending on materials, machinery, equipment, parts, maintenance, technology, repairs, improvements, new capital infrastructure projects and or social benefits for those in need.
“The combination of these two factors means that not only is the public sector too expensive, but it is also inefficient, not providing adequate service to the citizenry and is in a constant state of disrepair. The forced employment, by overreaching Ministers pushing into the operations of a ministry, have caused the perpetual increase in the cost of labor, aided by unions negotiating pay increases without care for productivity or national sustainability, is in part why the executives of government ministries have given up in terms of accountable management.”
Myers contended that this undermining of executive management paves the way for all kinds of nepotistic and corrupt acts that further add to the countries demise. “The question should be asked; why are ministers permitted to involve themselves in the day to day operations of a ministry that is mandated to provide specific services to the people, at what should be a balanced budget? The only ministerial and government involvement into the workings of a government entity should be at the legal or policy level.”
Myers pointed out that while the government has 39 Members of Parliament to run a country of less than 400,000 people, in most efficiently run countries in the world one single governor would run such a populous.
“The irony of it is that these MP’s are paid in the dark but don’t stop to examine the underlying core problem as to why that is, there are too many of them. Reduce the number of MP’s by two thirds and double their pay and everyone wins.
“Current and future governments, as well as all Bahamians, will soon be forced to acknowledge the reality of their irresponsible past. Government lending institutions, such as the World Bank and IADB, will now begin to impose austerity conditions on the government, that the government should have instituted on their own years ago. If the government wishes to continue to borrow foreign dollars that maintain the dollar parity, or continue to fund capital expenditure projects that would improve GDP or social well being, then they will have to balance their budgets. In the end, there are only four likely choices the government and the people of the Bahamas face.”
Myers suggested that government will have to implement austerity measures now, with minimal external pressure from lending institutions, that move the government back to a balanced budget within five years.
“This will require a gradual retraining of the public sector to prepare them for private sector work, a paradigm improvement in education and a massive push to improve and incentivize local and foreign direct investment in the Bahamas during this 5 year period. The cost and ease of doing business must improve by double digits,” he said.
He also noted that another option would be to continue borrowing from the normal responsible international organizations until they demand austerity measures be put in place.
“These measure will be a much harder than the above and will undoubtedly cause greater hardship to the people,” Myers added.
“They can also continue to irresponsibly borrow from strategic foreign countries, with ulterior motives, who will lend past the point of fiscal collapse only to then strategically lean on the sovereignty of the nation to get repaid or default on loans or continue to borrow past the US dollar reserve limits and the Bahamian dollar will uncouple from the peg and depreciate overnight. This will cause widespread inflation and a national recession the likes the country has never seen.”