Expressing concerns over The Bahamas’ record debt, Progressive Liberal Party (PLP) Senator Dr. Michael Darville said yesterday that the 2021/2022 budget shows that the Minnis administration is disconnected from reality.
“In our situation in The Bahamas today, this [Free National Movement] FNM administration through its 2021/2022 budget seems to be disconnected from the real issues and the significant challenges that are currently facing our nation,” he said during debate of the budget.
He added, “Since this government was elected in May 2017, they have added $3 billion to the national debt, which will soon become $4 billion once the budget is passed. They have increased taxes by 40 percent and our sovereign credit rating has been further downgraded.
“In 2017, they came to power on the people’s time wave, and the debt stood, at that time, at $6.5 billion. But by the end of June 2022, under their watch, it will balloon to $10.4 billion, a whopping 60 percent increase in just four years.
“And yet, they have the heart … and the gall to stand up in this Parliament patting themselves on the back and talking about how well they did in managing this country.
“The devil is a liar.”
In 2021/2022, the government projects record debt as a result of the difficult financial position the country is in.
In all, it projects to take in $1.8 billion in proceeds from borrowing in the coming fiscal year.
The corresponding government debt level is expected to rise to $10.4 billion in 2021/2022, equating to roughly 84.3 percent of GDP.
Darville echoed the views of former Health Minister Dr. Duane Sands, who said that the country is on a “fiscal cliff”.
“Despite this administration’s denial, the country is indeed on a fiscal cliff,” Darville said.
“… And may I add, we are standing on a banana peel.”
“In its communication in 2020, the [International Monetary Fund] IMF advised this government to implement decisive fiscal measures to put public debt on a clear downward path, so that the targets under the Fiscal Responsibility Act can be achieved.
“Based on what is reflected in this 2021/2022 budget, this Minnis-led administration is borrowing and increasing expenditure based on what I consider to be overstated and unrealistic revenues. Concerns have already been raised in the other place regarding what has been described as overstated revenue projections.
“Our debt position today is so precarious that more than ever small variations in our revenue expectations could spell disaster.”
Darville said he does not believe the country will be able to meet the conditions of its $250 million emergency loan from the International Monetary Fund (IMF).
“During the budget debate last year, I highlighted the fact that the IMF, as a condition of their $250 million dollar emergency loan, required that the government run a $500 million budget surplus beginning in 2024/2025 in order to hit a key debt reduction target by the end of this decade,” he said.
“At that time, I queried whether we were on a fool’s errand, and based on what I see in this budget … the answer to my question is a resounding yes.
“Our budget deficit for this fiscal year is projected at $951.8 million, which means that in order for us to hit this $500 million budget surplus target by June 2025 as set by the IMF, we will have to generate roughly $1.5 billion in three years, cumulatively. We should all believe in miracles, and I do, especially when it comes to the surplus.
“The truth of the matter is that unless and until we boldly face our challenges in an honest and forthright manner, no meaningful solutions will be found and we will be headed down the path into the arms of the IMF at an alarming speed.”
Darville said that the government cannot blame the situation on only Hurricane Dorian and the COVID pandemic.
“So, here we are today, Madam President, with what I describe as the government fiddling in the dark while we are sinking under the heavy burden of debt,” he said.
“When criticized, the government’s fallback position is the devastating effects of Hurricane Dorian and the COVID-19 pandemic.
“… Yes, it is a fact that both of these crises have exacerbated our debt woes, but if the truth be told, this administration had already borrowed $1.2 billion … even before we ever heard of Hurricane Dorian or the coronavirus.”