While the government has lauded itself for a successful $600 million bond offering, Progressive Liberal Party (PLP) Deputy Leader Chester Cooper yesterday called the 8.95 percent interest rate attached to it a failure that will cost Bahamian tax payers more than $50 million a year to pay off.
The Ministry of Finance announced earlier this week that its $600 million foreign currency bond, priced with a coupon (interest rate) of 8.95 percent per annum, had been fully subscribed through more than 140 investors.
But Cooper slammed the transaction, arguing that had the government acted sooner, The Bahamas could have achieved a better rate.
“During the budget debate in June, I told the governing side that they should have borrowed one to two billion dollars when I suggested in April when money was cheap. And they laughed and laughed. Now the government touts a successful $600 million US bond placement. But this is at 8.95 percent. This loan will cost the taxpayers more than $50 million a year just to service. You’ll pay more than double the loan by the time it’s paid off,” Cooper said during a virtual address on the economy to the PLP’s Yamacraw branch.
“My friends in the international finance community tell me we would [have] gotten a likely rate of six percent had we gone to market in April. That would have been a savings of more than $200 million for the taxpayers. I told them to go hard and go early, but they laughed and laughed.
“Now, the Bahamian people will cry. This administration should be ashamed at such a glaring failure.”
The Ministry of Finance said the bonds will mature on October 15, 2032 and the transaction will add an additional $352 million to the debt level of the country.
Describing the economy as being in a free fall, Cooper said the Minnis administration has made the prospects of economic recovery immeasurably worse.
“The competent authority says COVID-19 will be with us forever. So, where is the national plan for the new normal? Where are the new laws and legislation to effectively legislate and govern in the new normal? Where is the economic plan? Eight months in and the government continues to sit on its hands and be reactive to these issues.”
The shadow minister of finance added that the government should take a series of immediate steps to better assist Bahamians and get the economy up and running.
“The government can, tomorrow, deliver emergency cash support to people to enable them to buy food and water and pay for gas and electricity. This should be done with a debit card system or through direct deposits in bank accounts. The government can, tomorrow, support small business payrolls. There was some assistance previously. It didn’t go far enough and it primarily took the form of loans that added debt to already struggling businesses,” he said.
“However, there was no assistance set out for the businesses impacted by the measures introduced once the second wave started. And there is no talk of any assistance for the businesses affected by the new lockdown and curfew measures.
“Thirdly, the government should immediately work with landlords and banks so people can stay in their homes. The government must do more in this regard. The hands-off approach to this matter by this administration has been stunningly negligent. You can’t make a law saying that you have to accept just a percentage of rent due, but you can’t evict anybody and think that will all work itself out. The landlords will go into deeper debt. And last I checked, foreclosure laws remain intact.”