· IMF confirms aspects of DNA’s position on economy
· FNM approach inherently flawed and socially disruptive
· Government ignores significant impact of VAT increase
· Fiscal accomplishments disconnected from plight of masses
· Economic and financial service growth plan still lacking
The International Monetary Fund (IMF) in its recently released statement following discussions on the 2019 Article IV consultation provided confirmed observations that have been made by Bahamian experts over the years.
The Democratic National Alliance (DNA) acknowledges the efforts made by the government to address the fiscal challenges confronting our nation but contends that the approach adopted is inherently flawed and socially disruptive. The sixty percent increase in the regressive Value Added Tax (VAT) rate and the aggressive timeline for elimination of the GFS deficit has imposed significant hardship on the Bahamian people.
In its statement, the IMF estimated growth in Real Gross Domestic Product (GDP) of 2.3% at 2018 and projected 2.1% for 2019. However, the economic growth rate is projected to stabilize at 1.5% in the medium term in the absence of a comprehensive economic growth plan which could deliver the 5.5% required to absorb new entrants into the labor market annually.
Our nation remains plagued by unemployment in double digits and youth unemployment at an alarming rate of 23%. The fiscal targets and accomplishments touted by the government have simply failed to translate into economic empowerment or relief for the Bahamian people. The current administration has simply continued the infamous friends, family and lovers’ mentality.
The absence of a growth strategy for the financial services industry has reduced our government to a blacklist avoidance and escape agency.
The government is under pressure to restore credibility to financial planning and fiscal projections communicated to the nation under the watchful eyes of international observers. Expenditure and revenue forecasts cannot simply be inserted into the national budget as placeholders but must be underpinned by realistic expectations and assumptions. The current administration must find the empathy to end its relentless assault on the middle and working class in our society. The pontification on prudence in public sector hiring has been discredited by subsequent admission that terminated employees have been retained or replaced. They must rein in expenditure while discontinuing the tax, spend and borrow philosophy which burdens residents under a regressive and oppressive system of taxation.
The DNA has long advocated for a comprehensive review of the Bahamian tax system and the introduction of an equitable tax regime. The IMF noted that “Global tax trends and the prospective accession to the WTO thus present an opportunity for a comprehensive review of the Bahamian tax regime with a view to achieving a more equitable and less distortionary tax system. To strengthen transparency and inform future policies, a quantitative review of existing tax and other investment incentives is recommended”.
It is regrettable that the Free National Movement (FNM) is heavily influenced by special interest groups and party loyalists that do not want a progressive and equitable tax system. The endangered middle class and less privileged have been relegated to the proverbial backburner with no relief in sight as a result.
We have long called for initiatives aimed at addressing structural deficiencies within the Bahamian economy and deliberate efforts to improve the ease and cost of doing business. The DNA maintains that the government has failed to make the case for The Bahamas’ accession to the World Trade Organization (WTO) in an environment that places Bahamian businesses at a competitive disadvantage.
The current administration is notorious for not taking advice or counsel originating from locals but has gained a reputation for moving with haste to implement recommendations made by international and multilateral agencies. Perhaps they will now implement policies that benefit the masses now that the IMF has implored them to do so.
Arinthia S. Komolafe, Leader
Democratic National Alliance