Highlighting the “perilous” position The Bahamas is in regarding its high debt level, former Minister of Health Dr. Duane Sands said yesterday the government’s 2021/2022 budget fails to communicate the seriousness of the existing crisis and suggested stronger measures need to be taken to address the situation.
“As painfully political as a national, holistic, come-to-Jesus moment will be, sugarcoating our current situation is not the way to go,” said Sands during the budget debate in the House of Assembly.
“After 2021/2022, we need to implement some belt-tightening. Yes, I said it. Start with the state enterprises and eliminate the concept that there is a bottomless pit for money.
“If I were to criticize this year’s budget, I would say that it does not, in plain language, in incontrovertible ways, acknowledge that we are in deep trouble.
“There is no free lunch. We must now accept that things are different. We may have afforded champagne previously, but if we drink cider or beer, maybe we will emerge stronger and leaner.
“Let us accept that mortgage default rates of 40 to 50 percent help no one.
“Let us carve out sustainable investment in the future. Put a cost on the road to digital transformation and let us fund it. Let us continue on the road to the autonomy of healthcare.
“Let us accept that the current model is broken. Promising free care to all results in substandard or no care to many.
“Capital investments in healthcare without maintenance contracts and continuous capital equipment repair and upgrades are, quite frankly, nonsensical.”
Sands said that if an income tax is necessary to increase government revenue, it should be implemented.
“Let us reassess the tax structure of The Bahamas to meet the annual funding needs of the government,” he said.
“If it requires income tax, if it requires income tax, if it requires income tax, let’s do it voluntarily before somebody else makes us do it.
“Clearly, our tax system is inefficient and predicated on best-case scenarios. Clearly, we are underperforming, relative to best practices, collecting only between 15 and 18 percent of GDP as opposed to the international norm of 22 to 25 percent.
“After 2021/2022, let us right-size the contingency of climate change and other catastrophic events. There will be more Hurricane Irmas, Hurricane Matthews, Hurricane Dorians. They are going to become the norm, unless the world gets a handle on climate change.
“Let us shift some of the expenditure from the recurrent and focus on capital. Let’s get capital expenditure annually up to as much as 10 percent.
“Let us look reasonably at public-private partnerships. Let’s restructure the civil service.
“Finance the policies that impact ill-health and the massive expenditures on diseases that lead to [potential] years of life loss.
“Let us get serious about bread-basket reform, so that our people are not dying prematurely or living sick for the last 10 years of their lives.”
Sands noted that in 1974, the national debt was $108.2 million. It has now grown to $9.665 billion.
“This is not a sustainable scenario,” he said. “We have now reached, and I know what I’m going to say now will be deemed as alarmist, but we have now reached perilously close to the fiscal cliff.
“And that is not a political statement. Jamaica and Barbados have already fallen.
“Every year since 1974, successive Bahamian governments have spent more than they collected, every single year.”
The 2021/2022 budget projects a deficit of $951.8 million.
With the Minnis administration planning to take in $1.8 billion in proceeds from borrowing during 2021/2022, the government debt level is expected to rise to $10.4 billion, equating to roughly 84.3 percent of GDP.
Sands said The Bahamas is facing a “sovereign debt crisis” as he noted that the budget does not accurately convey the severity of the country’s financial situation.
He noted that 50 percent of the country’s revenue goes toward servicing its debt.
Sands said action is required urgently.
“We can no longer kick this reform down the road,” he said.
“So, Mr. Speaker, this is the time, now, today, not tomorrow, to start the road to resiliency and recovery. It’s time to lock in fundamental reforms going forward.”