Business

Former Chamber CEO: Borrow more locally to benefit Bahamians

The government should seek to do more local borrowing during the 2021/2022 budget cycle, so that Bahamians benefit financially from the repayment of those borrowed sums, Principal of Sumner Strategic Partners Edison Sumner said yesterday.

Sumner, who is also the former director and chief executive officer of the Bahamas Chamber of Commerce and Employers’ Confederation (BCCEC), said while it is understood that the government will likely do some foreign currency borrowing to support foreign reserves, he said it should look at many more bond issuances in the upcoming budget year.

“Borrow money from the Bahamian people so that they benefit as well,” said Sumner.

“That borrowing comes across through the government issuing bonds through the Central Bank, so that Bahamians also now get to benefit from government borrowing, rather than us paying all the interest to financial institutions outside The Bahamas.”

Sumner explained that while the government’s debt service ratio is high and climbing, the country has not been close to defaulting on its payments.

He said, though, that despite the country’s high debt levels, with the country into an 85 percent debt-to-GDP (gross domestic product) range, borrowing continues to be necessary, adding it can continue to be a structurally beneficial exercise.

“A little borrowing every now and then is not going to hurt, in fact, it is healthy because it maintains your credit worthiness and your ability to actually access these funds from international organizations,” he said.

“Unfortunately borrowing is inevitable. The problem is not borrowing the money, I have no difficulty with the government going out to borrow money, the issue will become our ability to service the debt, that is where the real concern comes.

“Is it going to be a burden on the Bahamian people for the next 50 years? If the government is able to borrow money and they are able to service that debt properly without getting into risky territories of defaults and the rest of it, then I think we’re ok.”

Sumner, who also advocated for the government to divest itself of certain government agencies in order to cut down its level of subventions, said he is eager to know where the government makes cuts in the upcoming budget.

“It will be interesting to see how the next fiscal budget lines up and the areas that the government will consider as the top priority areas that they want to pay attention to, that will inure to the economic growth and sustainability of the country,” he said.

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Chester Robards

Chester Robards rejoined The Nassau Guardian in November 2017 as a senior business reporter. He has covered myriad topics and events for The Nassau Guardian. Education: Florida International University, BS in Journalism

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