Explaining the recent fiscal budget to members of the Rotary Club Sunset on Thursday evening, Minister of State for Finance Zhivargo Laing, said that when the world markets were going down in 2007/08 markets here were also following suit, but noted that the Bahamian market had a better cushion.
“We were much more fortunate in this particular period. Notwithstanding that when you look at the forces, they were worse this time around than the ones that brought about the great depression. So we came very close to the brink,” Laing said.
He said that at that time the debt of the Gross Domestic Product (GDP) ratio was around 35-38 percent whereas in some countries they were already starting at 100 percent debt to GDP ratio.
The Minister then said that the government decided to make three decisions – to ensure integrity of the country’s financial systems; nurture the economy; and support the many people who were dislocated in the recession.
“We were trying to support a level of economic activity necessary to avoid a truly desperate financial circumstance.” To support the thousands who lost their jobs the government came up with a number of jobs and entrepreneurial incentives.
“And of course the cost to that meant that your debt to GDP ratio was at levels you have never seen before… going from 38 percent to 48 percent, which for The Bahamas, was relatively a significant increase, but compared to the world, people were laughing at us ‘boy I would love to be in your position right now.’ But that’s where we got.”
