Blasting the government for what he called poor fiscal management, Free National Movement Deputy Leader Sidney Collie said Wednesday if the government had been more prudent in administering the country’s finances it would probably not have had to rely so heavily on borrowing to fund its operation.
“This government did not budget properly for certain eventualities and it cannot claim fallout from the September 11 terror attacks anymore because that tragedy took place on the FNM’s watch,” Mr. Collie said.
Foreshadowing dire consequences if the IMF debt to GDP ratio is exceeded, Mr. Collie urged the government to do all within its power to restrain future growth in its level of indebtedness.
In its Public Information Notice on The Bahamas issued last July the IMF stated that, “For 2003-2004, the government debt-to-GDP ratio would still be below 40 percent.
However, the debt path is vulnerable to significant downside risks related, in the near term, to slower U.S. growth and continuing security concerns and, over the medium term, to a gradual erosion in external competitiveness because of relatively high labor and utilities costs.”
IMF directors recommended that the government’s economic policy focus on raising international reserves, regaining room for fiscal maneuvering, and diversifying the economic base to maintain confidence and reduce economic vulnerabilities.
“If the Bahamian economy goes anywhere from 36 percent up to 40 percent or more and thereby exceeds the IMF prescribed level that can have serious implications for The Bahamas,” Mr. Collie said.
“Certainly The Bahamas does not wish to have the IMF come into this country and supervise our economy and to impose some of the restrictions it has done in countries in this region and countries around the world. That could have implications regarding our currency, balance of payments, the deficit and our way of life.”
Minister of State for Finance James Smith, meanwhile, said last week that a number of unplanned expenses resulted in the government going “off target”, resulting in the deficit for fiscal year 2003/2004 likely ending higher than projected.
Among the unexpected disbursements were $24 million in civil servant salary increases.
The $122 million shortfall originally forecasted in the 2003-2004 budget would have raised government debt by 2.2 percent to 38.7 percent of GDP.
Darrin Culmer, The Bahama Journal
