06052018 business

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TUESDAY, JUNE 5, 2018

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$360m arrears ‘dive in’ not in national interest

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

T

HE government’s rush to pay-off its $360m arrears is “not in The Bahamas’ best interest”, a former finance minister yesterday warning of the VAT hike: “The timing couldn’t be worse.”

James Smith, who held the post from 2002-2007, told Tribune Business that present incumbent, KP Turnquest, cannot present himself as “the good guy” with his austerity measures when he could have “saved taxpayers” from the full brunt 60 percent VAT rate hike.

Citing numerous reasons why a 12 percent VAT rate is unnecessary, Mr Smith said the government needed to pursue monies owed to it - especially the $400-$500m in allegedly outstanding real property tax - with the same vigour as it is implementing new and increased taxes.

He argued that the VAT increase was “premature” given the “dampening effect” it was likely to have on signs of a Bahamian economic turnaround and reviving investor confidence - indicators he had previously been optimistic about.

Mr Smith also echoed Sir Franklyn Wilson’s concerns

* VAT hike’s ‘timing couldn’t be worse’ * Ex-finance minister: target receivables too * Could have ‘saved taxpayer’ from 60% rise * Warns of deficit rise from revenue miss

JAMES SMITH that the 60 percent VAT rate hike will translate into a revenue increase of the same magnitude, as projected by the government’s own 20182019 budget forecasts.

He warned that this could again lead to revenue under-performance and an overshooting of the $237m GFS fiscal deficit projected for the upcoming fiscal year, especially since the government’s commitment to paying off $172m in unfunded arrears would make it hard to adjust spending.

Insurance chief ‘speechless’ at govt’s VAT contradiction

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Bahamas Insurance Association’s (BIA) chairman was yesterday left “speechless” after the government seemingly contradicted itself over VAT’s elimination from residential property premiums.

Emmanuel Komolafe, pictured, said he was now questioning the government’s commitment to improved insurance affordability and “penetration”, after both the deputy prime minister and acting financial secretary told Tribune Business that residential property coverage will be treated as VAT “exempt” rather than “zero rated”.

He revealed that this contradicted what KP Turnquest had told him at last Thursday’s meeting with the Chamber of Commerce,

* DPM HAD TOLD HIM ‘ZERO RATED’ * AFFORDABILITY COMMITMENT IN QUESTION * FEARS TAX HIKE WILL LOWER COVER LEVELS after he specifically asked the deputy prime minister whether VAT’s removal from residential property premiums would result in the product being treated as “zero rated”.

“Zero rating” is the most favourable value-added tax (VAT) treatment, as it relieves both the consumer and business from having to pay the levy. But “exempt” status, while still relieving the consumer, leaves the

SEE PAGE 3

“The quick answer to that would be no,” Mr Smith replied, when asked by Tribune Business whether he believed a 60 percent VAT rate hike was warranted.

“I think the timing couldn’t have been worse. I really don’t think jumping right in to pay off all those payables at this time is in The Bahamas’ best interests.”

The government’s budget projections show gross VAT revenues rising by $400m year-over-year, from the $663.562m forecast in 20172018 to $1.062bn in the upcoming 2018-2019 fiscal year. This sum is forecast to increase further to $1.115bn in 2018-2019, and $1.54bn in 2019-2020.

Mr Smith, though, argued that the scale of the revenue increase far exceeded the $360m in unfunded arrears that the Minnis administration plans to pay off over the next three years. He said the narrow timetable was too short, and would impose unnecessary stress that could throw the Bahamian economy back into recession

by undermining consumer demand.

Collectively, if the government hits its targets, Mr Smith suggested that it will raise at least $1.1bn in net new money in the period to end-2021, even after accounting for the $100m in Customs and Excise Tax reductions that Mr Turnquest pledged to make once this period ends.

The deputy prime minister, though, is also factoring in a $76m increase to end the “sham” or “fudge” of persistent under-budgeting for known costs, plus $89m for extra debt interest payments and an additional $19m in recurrent spending. Coupled with the $172m in first-year arrears payments, this takes the additional 2018-2019 expenditure to $356m, thus absorbing most of the extra VAT money.

Still, Mr Smith argued that the government should not focus solely on the “payables” side of its balance

SEE PAGE 2

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Hotels ‘push’ on VAT amid 39% revenue growth

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

THE 39 per cent increase in 2018 first quarter room revenues illustrates what was at stake when the hotel industry yesterday met the Government over its planned VAT hike.

The Central Bank of The Bahamas’ monthly report for April, released last night, revealed that pricing power among Nassau/Paradise Island hotels had increased year-over-year despite the launch of much of Baha Mar’s 2,300 room inventory.

Average daily room rates (ADRs) increased by 11 per cent to $273.59, while rooms nights sold rose by 26 per cent during the peak winter period that was boosted by an earlier Easter this year.

The only negative indicator was occupancy rates, which declined by 7.1 per cent for the three months to endMarch 2018.

The report’s production coincided with yesterday’s meeting between the Bahamas Hotel and Tourism Association (BHTA) and K P Turnquest, Deputy Prime Minister, and his Ministry of Finance officials to discuss the likely impact of the 60 per cent VAT rate increase on the country’s largest industry and employer.

Carlton Russell, the

* MEET GOVT OVER PLANNED 60% HIKE * TAX RISE ENDANGERS 26% NIGHTS SOLD RISE * AND 11% RATE/PRICING POWER REBOUND BHTA’s president, and Robert Sands, Baha Mar’s senior vice-president of external affairs, both declined to comment beyond confirming that the meeting took place. It was the first in a series of industry-specific meetings that the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) has organised with the Government to discuss the implications of its 2018-2019 fiscal plans for the private sector and wider Bahamian economy.

An insight into the 12 per cent VAT rate’s likely impact on the tourism industry can be gleaned from the Ernst & Young (EY) analysis that was produced for the sector in 2014 during the run-up to the Christie administration’s ultimate implementation of a 7.5 per cent, broad-based levy.

The EY study, which was based on a 10 per cent VAT for hotels and 15 per cent on other tourism sales, rates that

SEE PAGE 4

Sands: No escape on fiscal ‘come to Jesus’

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Bahamas would not have escaped its fiscal “come to Jesus moment” even if the Christie administration had been prudent with its VAT windfall, a Cabinet Minister argued yesterday.

Dr Duane Sands, pictured, minister of health, told Tribune Business that this would “only have delayed the day of reckoning” as the government’s financial ills extend far beyond its central balance sheet to the National Insurance Board (NIB) and other floundering public entities.

Expressing optimism that the Minnis administration will “not go down” as a result of its efforts “to save the country” from bankruptcy, Dr Sands said The Bahamas’ 45-year run of annual deficit spending was unsustainable and had to be brought to an end.

He pledged that he and

* PLP ‘prudence’ would only have delayed * Pledges govt ‘stands with DPM’ on austerity * Says 45 years of deficit spend must cease

other Cabinet Ministers stood shoulder-to-shoulder with KP Turnquest, deputy prime minister, on the need to inflict painful fiscal austerity on Bahamian households and businesses through a 60 percent VAT rate hike and other revenue-enhancing measures.

Dr Sands also revealed that efforts to restructure the so-called “breadbasket food” items had not been halted by the budget, suggesting that

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the inclusion of healthier foods would occur within “two to three months maximum” once Family Island consultations were completed and the list’s VAT “zero rating” was enshrined in law.

While the Minnis administration has directed much fire and fury at its predecessor for squandering the net $750m revenue increase that VAT produced in its first two calendar years, the Minister conceded yesterday that wiser use of this money would not have prevented last week’s drastic fiscal measures.

“The day of reckoning would certainly not have come as quickly, but we would still have had to have this “come to Jesus” moment

where we acknowledge the basic issue,” Dr Sands told Tribune Business.

“One of the fundamental issues is that we cannot continue spending more than we collect, and every single year for the last 45 years we have done exactly that.

When you get to the point of spending $1bn a year for debt servicing (interest and principal redemption) and have a $2.4bn budget, and an $11-$12bn economy, that’s unconscionable.

“That’s unsustainable.

It’s enough. We’re just over the top. There has to be a major correction. In the first instance, everyone is going to bristle, everyone is going to baulk. When you slap people

SEE PAGE 2

Surplus bank funds breach $2bn barrier

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net BAHAMIAN commercial banks had more than $2bn in funds they were unable to find qualified borrowers for at end-April 2018, it was revealed yesterday.

The Central Bank of The Bahamas’ monthly report for the month, published yesterday, disclosed that excess commercial banking system liquidity representing surplus assets available for lending - stood at $2.005bn at month’s end.

James Smith, former minister of state for finance, told Tribune Business that the record excess liquidity level was one of the “problems” created by the government’s decision to

repay short-term Bahamian dollar loans with the proceeds from last year’s $750m foreign currency bond.

Amid the banking sector’s “conservative stance” on lending, Mr Smith said the inability to find qualified borrowers meant banks were sitting on an evergrowing pile of surplus cash that continues to drive down deposit rates and penalises savers.

He added that the bond proceeds, which had to be converted into local currency by the Central Bank, had effectively been a “balance of payments support” as banks were not using the proceeds for productive, investment purposes to “grease the economy”

SEE PAGE 4

PAGE 2, Tuesday, June 5, 2018

THE TRIBUNE

STERLING MEETS GOV’T ON HURRICANE HOLE PROJECT STERLING Global Financial’s executives met with the Ministry of Works to review plans for their $250m redevelopment of Paradise Island’s Hurricane Hole property.

Desmond Bannister, minister of works, and Melanie Roach, director of public work, reviewed draft proposals for transforming the 13-acre Paradise Island site into a mixed-use tropical/urban landscape with residential, retail, professional office space and dining overlooking a renovated marina and Nassau harbour.

The meeting with the Ministry was the first in a series that Sterling plans to schedule as part of its commitment to collaboration, environmental sensitivity and consultation, as it heads towards

FROM L: Stephen Tiller, Sterling president; Khaalis Rolle, Sterling Global Advisors managing director; Jonell Rigby, Sterling Global Financial’s in-house counsel; Desmond Bannister, minister of public works; and Melanie Roach, director of works.

January 2019 groundbreaking for the largest development on Paradise Island since

Atlantis’s Phase IV. The 300,000 square foot project is expected to be built in three phases over

a five-year period, a schedule that Sterling Global Advisors’ managing director described as “very ambitious”. Khaalis Rolle, the former investments minister, said the project will provide hundreds of construction-related jobs and multiple entrepreneurial opportunities.

“We are working extremely hard to deliver a first-class development where you can live, work and be entertained,” said Mr Rolle. “I want to assure you that we will commit sufficient human and capital resources to ensure that this project is executed to world-class standards. We will cut no corners in protecting the environment or in the quality of our construction.”

“Sterling has been working quietly in the

background and, quite possibly, is the largest provider of both debt and equity funding for projects under construction in The Bahamas right now,” said Stephen Tiller, its president.

“We have provided funding for One Cable Beach, The Marriott Courtyard on West Bay Street, THIRTYSIX on Paradise Island, Beach House Villas, Matt Lowe Cay in Abaco, Sky Beach in Eleuthera, Ocean Terraces on West Bay Street, and we are currently financing projects in London, Boston and Miami, but we are really excited about this project on Paradise Island because it is home for so many of us at Sterling.”

Both the Minister and Ms Roach encouraged Sterling to engage the government

and its agencies in discussions regarding its plans, and identified some of the areas where it will have to satisfy regulatory requirements to begin construction.

Local Paradise Island residents have been greeting Sterling’s plan with great interest since it was introduced just over one month ago. The promise of new restaurants, shopping and residential options topped the list for several long-time residents.

The development will include mixed-use, multistorey buildings with retail on the ground floor, office space on the second and residences with harbour and marina views on the top floor. It will not compete with Atlantis, but instead complement the resort’s offerings.

$360m arrears ‘dive in’ not in national interest

FROM PAGE ONE

sheet. “Let me put it this way,” he told Tribune Business. “Logic would dictate one ought to apply the same attention to the government’s receivables.

“We know the government has receivables, particularly on real property taxes, some business licence fees and Customs duties, where people are allowed to carry the items, pay later and never do.

“I recall four to five years ago there was a ball park figure of $400-$500m

in outstanding real property taxes. If you’re going to borrow money to settle government payables you should first, or at the same time, try and get the government’s receivables.”

Mr Smith said the Real Property Tax Act provided the perfect enforcement mechanism for this, given that it allows the government to seize the very real estate assets owned by delinquent taxpayers. But successive governments, including the one where he was a Cabinet minister, have refused to employ this tool.

NOTICE

NOTICE is hereby given that HOWARD ST. MICHAEL WILSON of Bailey Town, Bimini, Bahamas is applying to the Minister responsible for Nationality and Citizenship, for registration/naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/ naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 5th day of June, 2018 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, Bahamas.

NOTICE Pursuant to the provisions of Section 138 (8) of the International Business Companies Act (as amended), NOTICE is hereby given that Batterie Limited has been dissolved and has been struck from the Register with effect from 4th May 2018.

“I’m not impressed with wanting to settle these bills and be a good guy,” he said of Mr Turnquest, “but you don’t want to exercise your rights and save the taxpayer the increase in VAT.” Mr Turnquest, in unveiling the 2018-2019 budget, pledged a revived crackdown by the Government’s Revenue Enhancement Unit, which has been set an “above run rate” $80m target for collecting a mixture of outstanding Customs, Excise and real property taxes.

He argued, though, that the benefits of enhanced administration and enforcement will not come through quickly enough to alleviate the need for a VAT rate increase. The deputy prime minister indicated that added impetus for the rise had come from 20172018 revenues falling some $130m below projections.

Mr Smith, though, agreed that the 60 percent VAT hike was spectacularly ill-timed given that

the Bahamian economy was showing signs it may achieve the projected GDP growth for 2018 - its highest rate in a decade.

“The economy had bottomed out and turned around,” he told Tribune Business, pointing to factors such as Baha Mar’s opening, an 18 percent first quarter stopover visitor increase, and an improving US economy.

“It seemed to me the timing is a bit premature,” Mr Smith added of the government’s move.

“I would have waited six months to a year to see if this turnaround became an upward trend. I would have waited to see if that was happening.

“The country is going to pay a big price for this if we don’t have a quick turnaround, which was on the way, but the increase in prices because of VAT is going to have a dampening effect on this.

“I was really positive about the turnaround. I had

been looking at some of the indicators, and I could see something was happening.

I had done a piece for one of the companies here and, after the VAT rise came out, I had to call it back and put in a paragraph saying all these things are trending upwards but it was difficult to see this continuing with the tax increase.”

Mr Smith also warned that “you don’t get a linear relationship” between the magnitude of a tax increase and the corresponding amount of revenue raised.

VAT, as a regressive tax borne primarily by consumers, was likely to produce reduced spending as persons adjusted consumption to higher prices and reduced living standards.

“You can’t raise VAT by 4.5 percentage points and get $400m from it. It’s non-linear, and causes a compression of the economy,” he told Tribune Business. “You might get a reduction in receipts. With an increase in prices, other

things being equal, you depress revenue.

“With the rise in the price level you stop employment opportunities and investment decisions. The local investor has to think twice as to whether, because of the state of the economy, he wants to further invest.

It takes confidence out of the economy, and has a deleterious effect.

“I would argue that until a further analysis is done, it’s going to bring in substantially less revenue than expected, which is the beginning of deficits. I suspect they’re not going to get what they’re projecting.”

Mr Smith added that the government, by creating numerous VAT exemptions, was “weakening their own projections” because it was opening up “loopholes” that could be exploited for tax evasion and avoidance.

Sands: No escape on fiscal ‘come to Jesus’ FROM PAGE ONE in the face with a hefty dose of reality, the response is never easy or positive. We’ve been lied to and made to feel good for the last 45 years.

Why tell us the truth now?”

The government spent $930.172m on a combination of debt servicing (interest)

and principal redemption costs during the nine months to end-March 2018, although a sizeable chunk of that reflects the short-term borrowings taken out by the $750m foreign currency bond. A further $709.413m is earmarked for such purposes in 2018-2019.

Dr Sands, though, said

the government’s three-year strategy addresses only its own, direct balance sheet.

Giving an insight into further hardship that may await Bahamians, he pointed to the unfunded civil service pension liabilities - projected to hit $3.7bn by 2030 - and a $1.6bn NIB reserve fund that is forecast to be exhausted at

around the same date.

“We’re faced with all these things,” he told Tribune Business. “You look at the legacy debt and all the unfunded spending. You have the pension issue, the NIB impending disaster. The Bank of The Bahamas is an

SEE PAGE 4

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THE TRIBUNE

Tuesday, June 5, 2018, PAGE 3

TOURISM TEAM HEADS TO CARIBBEAN WEEK THE Minister of Tourism and Aviation will lead the Bahamian delegation to the Caribbean Tourism Organisation’s (CTO) Caribbean Week event in New York this week.

Dionisio D’Aguilar will be accompanied by Joy Jibrilu, the Ministry’s director-general, and other representatives to the CTO’s major annual summit, which is being held from June 2-8 at the Wyndham New Yorker hotel.

Tourism officials, industry professionals, media, students and Caribbean

DIONISIO D’AGUILAR consumers will share and receive updates on the state of tourism in the region, and celebrate the sights, sounds,

colour and culture of the Caribbean.

Mr D’Aguilar, Mrs Jibrilu and others will join members of the CTO for a Caribbean diaspora forum, student colloquium and a variety of business sessions, conferences, trade shows, marketplaces and workshops discussing topics related to tourism in the Caribbean. The Rum & Rhythm Benefit, which aids the CTO Foundation, and consumer-oriented events will bring together attendees for Caribbean-inspired food, lively entertainment and

networking opportunities.

In his final year as CTO chairperson, Mr D’Aguilar will speak to the current state of the travel industry throughout the Caribbean, providing updates on visitors, hurricane relief efforts and new developments for travellers. He will also attend meetings and media engagements on behalf of the Bahamas.

“I look forward to a week of networking, exchanging ideas and celebrating the Caribbean with the industry’s best and brightest at this year’s Caribbean Week,”

said Mr D’Aguilar. “It has been an honour to serve as CTO chairperson and represent this beautiful and culturally rich part of the world, and I look forward to returning to the event in my capacity as minister of tourism in the future.”

The week of events will finish with the Caribbean Tourism Industry Awards Dinner on June 7.

Mrs Jibrilu will receive the esteemed Allied Award, presented to an individual who has done an extraordinary job of contributing, in a tangible way, to the

sustainable development of the region. The Bahamas is also nominated in four categories for the Media Awards portion: ‘Virtual Visitor Award’: Best Feature in an Online Publication; ‘Up the Social Ladder’: Best Social Media Marketing Campaign by a CTO Member Country; ‘Me Too! I Rediscovered Home!’ Best Feature by a Diasporan Journalist in US or Caribbean Media; and ‘No Anansi Story!’

Best Feature by a Caribbean-based journalist (that appeared in Caribbeanbased media).

Insurance chief ‘speechless’ at govt’s VAT contradiction FROM PAGE ONE business with the burden of paying VAT on its “input” costs.

Mr Komolafe expressed fears that VAT “exempt” status would do little to reduce residential property insurance premiums, as the industry’s inability to offset its “input” tax against that paid by consumers would result in increased business costs that are almost inevitably passed on to Bahamian consumers.

And he warned that this effect will be exacerbated by the VAT rate’s rise to 12 percent, the BIA chairman predicting that the combination with “exempt” status might lead to an increase not decrease - in catastrophic coverage costs.

With global reinsurers intensifying pressure for premium rate rises as a result of the multi-billion dollar damage inflicted by the Caribbean’s 2017 hurricane season, Mr Komolafe added that any VAT-induced costs increases were especially ill-timed.

He pointed out that such impacts ran counter to

advice from the International Monetary Fund (IMF) and Inter-American Development Bank (IDB), which have both called for The Bahamas to make insurance more affordable and accessible as a means to reduce the post-hurricane relief burden on the government.

“Wow, that is surprising. I’m almost speechless,” Mr Komolafe told Tribune Business of Mr Turnquest’s comments to this newspaper.

“The repercussions of being VAT exempt as opposed to “zero rated” are that the cost is still being borne and everything is going up by 4.5 percentage points.

“The increase to 12 percent will still be there, and will still be factored into the pricing. Having taken on that extra cost, even though you’re not charging VAT [to consumers], very likely you will pass it on to the consumer.

“On the record, it’s fair for you to mention I was part of the Chamber delegation that met with the deputy prime minister,” the BIA chair added. “I posed the question to him, and he said it will be zero rated as the policy was to make insurance,

residential property insurance, more affordable for Bahamians and residents .

“That will ensure more people take out insurance to cover their own risk, so in the event of a catastrophic event there will be less people relying on government for relief.”

Mr Komolafe spoke out after Mr Turnquest and Marlon Johnson, the acting financial secretary, told Tribune Business that the removal of VAT from residential property premiums will be treated as “exempt”. Both men said they had to “confirm” this position, but there had been no official notification of any change by yesterday evening.

“It’s a total contradiction of the announcements of the government up to this point,” the BIA chairman blasted. “The very fact that we had a very busy hurricane season, there’s a great deal of pressure on property insurance premiums, and for the government to increase VAT to 12 percent it’s a contradiction.

“I question the commitment to affordability and penetration, and reducing

reliance on government. At a time when you’re talking about an increase in VAT to 12 percent, the impact on the economy and the impact on disposable income, I’m almost speechless. I don’t understand. It defeats the whole purpose.”

With “insurance not up there on the scale of priorities” among Bahamian households, Mr Komolafe expressed concern that the combination of “exempt” status and a 60 per cent VAT rate hike would encourage persons - especially those with no mortgage secured on their home - to either underinsure or drop coverage altogether.

With the government allocating just $2m to a “Disaster Relief Fund” in the 2018-2019 budget, down from a $2.5m allocation the previous year, the BIA chairman warned that the consequence of its VATrelated insurance policies could be an increased financial burden should a major storm strike this nation.

He again called for The Bahamas to establish a “comprehensive disaster relief programme”, given the ability of hurricanes to throw

the government off-course from the consolidation targets set out in the Fiscal Responsibility Bill.

“The same effort put into the Fiscal Responsibility Bill should also be put into a comprehensive disaster relief programme for the country,” Mr Komolafe told Tribune Business.

“That’s the biggest challenge to any of the objectives of the legislation and fiscal consolidation.”

Mr Komolafe added that health and life insurance products, and their affordability, will suffer a similar negative impact from the increased VAT rate.

“It seems to be a dichotomy that in seeking to achieve the objective of being the healthiest nation in the region by 2030, the VAT rate on healthcare and health insurance is being increased from 7.5 percent to 12 percent,” he said.

“This is also at odds with the government’s goal of increasing access to quality and affordable healthcare in The Bahamas. It is noteworthy to state that VAT is being eliminated on medicines and not healthcare. In relation to life insurance

products, the increase in VAT rate to 12 percent will impact the premiums on these products. While they are exempt, the increase in VAT will impact the pricing of these products.”

The BIA chief added: “We had expected that measures introduced by the government in the budget will make insurance (that is, life insurance, health insurance and general insurance) more affordable and accessible to Bahamians and residents.

“This would have facilitated an increase in insurance penetration across our archipelago of islands and enable more persons to insure their own risks while reducing dependence on the government. The budget communication does not appear to have achieved this objective.”

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PAGE 4, Tuesday, June 5, 2018

Sands: No escape on fiscal ‘come to Jesus’ FROM PAGE TWO ongoing disaster, the Bahamas Mortgage Corporation is an ongoing disaster, and I could go on and on.”

He added of the Deputy Prime Minister: “God bless him, he’s been willing to stand in the front and say: ‘OK, take the shot, take the shot’. We’re going to stand up with him.

If we’re going to go down, which I believe we won’t, let’s go down fighting and try and save this country. Hopefully, we won’t go down.”

Dr Sands also slammed the $226m, or 40 percent, civil service wage bill increase that occurred largely under the former Christie administration as “unconscionable” and “an unfortunate inability to do what was prudent and wise”.

Suggesting that the

previous government’s fiscal turnaround plan seemed to have been based on “hope” alone, he added: “They had a massive revenue windfall with the implementation of VAT and squandered it with wasteful, unnecessary recurrent and capital expenditure.”

Dr Sands, though, conceded that “ultimately what’s going to get us out of this mess is an increase in revenue for new industries, new investments” although he did not identify these sectors of opportunity.

“You’re never going to get out of this mess from contracting. You’ve got to have economic growth,” the Minister agreed, adding that this had to come from the private sector and not government.

Dr Sands, meanwhile, said the Budget will not change his Ministry’s plans to overhaul

the “breadbasket” list even though the deputy prime minister read out its existing contents as products that will - initially at least - be subject to “zero rating” for VAT purposes.

He explained that the government had been pursuing two parallel, complementary tracks. One was the public consultation on the proposed “breadbasket” line-up changes, and the other the move to alter their treatment under VAT. While sugar has been removed by common consensus, Dr Sands acknowledged the “push back” received on eliminating corn beef and other Bahamian dietary staples. And, with consultation in the Family Islands yet to conclude, revisions to the list have been delayed but will happen.

Surplus bank funds breach $2bn barrier FROM PAGE ONE and fuel growth.

Elsewhere, the Central Bank found that the government’s deficit for the first nine months of the 2017-2018 fiscal year fell by 31.6 percent or $88.4m to $191.6m, largely due to cuts in capital spending as revenue growth remained anemic.

“This reflected an $80.3m (4.6 percent) decline in total expenditure to $1.657bn, coupled with an $8.1m (0.6 percent) increase in total revenue to $1.466bn,” the Central Bank said.

“The contraction in total expenditure was underpinned by a $114.3m (50.3 percent) decline in capital spending to $113.1m, as infrastructure outlays fell sharply by $85.4m to $95.9m, following the hurricane rebuilding-related

expansion in the prior year. Further, asset acquisitions decreased by $28.9m (62.6 percent) to $17.3m.

“In contrast, current expenditure grew by $34.2m (2.3 percent) to $1.544bn, primarily backed by a $40.3m (5.2 percent) gain in consumption spending. A breakdown of the components showed that both personal emoluments and purchases of goods and services firmed, by $19.8m (3.8 percent and $20.5m (7.8 percent), respectively.”

On the revenue front, the Central Bank said: “The gain in aggregate receipts reflected an $11.9m (0.9 percent) increase in tax collections to $1.32bn. Specifically, value added taxes (VAT) firmed by $12m (2.6 percent), and selective taxes on services rose by $5.7m (26.2 percent).”

NOTICE

Turning to The Bahamas’ growth prospects (pre-VAT hike at least), it added: “Expectations are that the modest pace of economic expansion should be maintained over the near-term, buoyed by sustained growth in the high value-added stopover segment of the tourism sector, while a number of foreign investment projects should continue to support construction sector activity.

“Given the prevailing domestic and international economic conditions, the Central Bank’s current monetary policy stance remains prudent, as net foreign currency demand continues to be sustainable. No near-term adjustment in interest rate or credit measures is therefore warranted.”

NOTICE is hereby given that ANTHON JOSAPHAT of Balfour Ave.,, New Providence, The Bahamas is applying to the Minister responsible for Nationality and Citizenship, for registration/naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/ naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 29th day of May, 2018 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, Bahamas.

THE TRIBUNE

Hotels ‘push’ on VAT amid 39% revenue growth FROM PAGE ONE are not too dissimilar to the planned 12 percent. It found that the then-proposed rates would increase the prices paid by tourists in an already high-cost Bahamas by nine percent, and raise the net tax burden on the sector by around $320m based on 2015 levels.

“A nine percent increase in tourism prices would reduce tourism consumption by 11 percent,” the EY study found. “As tourists respond to increased prices resulting from the VAT, they would reduce the number of visits and consume fewer goods and services in The Bahamas.

The analysis estimates that this response would reduce tourism sales by $380m in 2015 levels.

“A $380m reduction in tourism sales in 2015 would result in the elimination of 9,000 tourism and related jobs across the Bahamian economy. It would result in a loss of nearly 4,700 direct tourism sector jobs, relative to the baseline in 2015 (11 percent reduction).

“The total domestic job loss would increase to 9,000 jobs when considering jobs supported by the tourism industry’s supply chain and employee spending (the ‘multiplier’ effect). By 2017, the economy-wide job loss would increase to nearly 13,200 jobs, of which 6,800 would be from within the tourism industry.”

One source, speaking on condition of anonymity, said the hotel/tourism industry’s chief concerns align with

NOTICE

NOTICE is hereby given that LOUVENS LOUIS of East Street and Domingo Height, New Providence, The Bahamas is applying to the Minister responsible for Nationality and Citizenship, for registration/naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twentyeight days from the 5th day of June, 2018 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, Bahamas.

MARKET REPORT MONDAY, 4 JUNE 2018

t. 242.323.2330 | f. 242.323.2320 | www.bisxbahamas.com

BISX ALL SHARE INDEX: CLOSE 1,940.66 | CHG -19.23 | %CHG -0.98 | YTD -122.91 | YTD% -5.96 BISX LISTED & TRADED SECURITIES 52WK HI 4.40 19.17 7.50 3.85 1.64 0.19 4.05 8.90 6.60 5.30 10.40 2.71 1.61 8.21 6.10 11.48 7.29 13.67 12.51

52WK LOW 3.50 17.43 7.50 3.32 0.90 0.12 3.10 8.40 6.00 3.15 9.00 2.30 1.40 7.25 6.00 8.78 5.67 3.35 12.01

1050.00 1000.00 1000.00 1000.00

1000.00 1000.00 1000.00 1000.00

PREFERENCE SHARES

1.00 103.00 100.00 106.00 105.00 103.00 100.00 10.00 1.01

1.00 100.00 100.00 100.00 105.00 100.00 100.00 10.00 1.00

SECURITY AML Foods Limited APD Limited Bahamas Property Fund Bahamas Waste Bank of Bahamas Benchmark Cable Bahamas CIBC FirstCaribbean Bank Colina Holdings Commonwealth Bank Commonwealth Brewery Consolidated Water BDRs Doctor's Hospital Emera Incorporated Famguard Fidelity Bank Finco Focol J. S. Johnson

Cable Bahamas Series 6 Cable Bahamas Series 8 Cable Bahamas Series 9 Cable Bahamas Series 10 Colina Holdings Class A Commonwealth Bank Class E Commonwealth Bank Class J Commonwealth Bank Class K Commonwealth Bank Class L Commonwealth Bank Class M Commonwealth Bank Class N Fidelity Bank Class A Focol Class B

CORPORATE DEBT - (percentage pricing) 52WK HI 100.00 100.00

52WK LOW 100.00 100.00

SYMBOL AML APD BPF BWL BOB BBL CAB CIB CHL CBL CBB CWCB DHS EMAB FAM FBB FIN FCL JSJ CAB6 CAB8 CAB9 CAB10 CHLA CBLE CBLJ CBLK CBLL CBLM CBLN FBBA FCLB

SECURITY Fidelity Bank Note 18 (Series E) + Fidelity Bank Note 22 (Series B) +

SYMBOL FBB18 FBB22

Bahamas Note 6.95 (2029) BGS: 2015-1-3Y BGS: 2014-12-5Y BGS: 2015-1-5Y BGS: 2014-12-7Y BGS: 2015-1-7Y BGS: 2014-12-30Y BGS: 2015-1-30Y BGS: 2015-6-3Y BGS: 2015-6-5Y BGS: 2015-6-7Y BGS: 2015-6-30Y BGS: 2015-10-3Y BGS: 2015-10-5Y BGS: 2015-10-7Y

BAH29 BG0203 BG0105 BG0205 BG0107 BG0207 BG0130 BG0230 BG0303 BG0305 BG0307 BG0330 BG0403 BG0405 BG0407

BAHAMAS GOVERNMENT STOCK - (percentage pricing) 115.92 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

104.79 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

MUTUAL FUNDS 52WK HI 2.15 4.16 2.00 178.69 157.58 1.55 1.70 1.62 1.10 6.99 8.54 6.15 10.52 11.46 10.46

52WK LOW 1.67 3.04 1.68 164.74 116.70 1.48 1.62 1.57 1.04 6.41 7.62 5.66 8.65 10.54 9.57

LAST CLOSE 4.40 17.43 9.09 3.50 1.01 0.18 3.35 8.89 6.12 4.10 10.05 2.63 1.60 7.63 6.10 11.00 6.30 3.80 12.51

CLOSE 4.40 17.43 9.09 3.85 1.01 0.18 3.10 8.89 6.12 4.10 10.05 2.58 1.60 7.61 6.10 11.00 6.30 3.46 12.51

CHANGE 0.00 0.00 0.00 0.35 0.00 0.00 -0.25 0.00 0.00 0.00 0.00 -0.05 0.00 -0.02 0.00 0.00 0.00 -0.34 0.00

1000.00 1000.00 1000.00 1000.00 1.00 100.00 100.00 100.40 100.00 100.00 100.00 10.00 1.00

1000.00 1000.00 1000.00 1000.00 1.00 100.00 100.00 100.40 100.00 100.00 100.00 10.00 1.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

CLOSE 100.00 100.00

CHANGE 0.00 0.00

108.49 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

LAST SALE 100.00 100.00 108.49 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

FUND CFAL Bond Fund CFAL Balanced Fund CFAL Money Market Fund CFAL Global Bond Fund CFAL Global Equity Fund FG Financial Preferred Income Fund FG Financial Growth Fund FG Financial Diversified Fund FG Financial Global USD Bond Fund Royal Fidelity Bahamas Opportunities Fund - Secured Balanced Fund Royal Fidelity Bahamas Opportunities Fund - Targeted Equity Fund Royal Fidelity Bahamas Opportunities Fund - Prime Income Fund Royal Fidelity Int'l Fund - Equities Sub Fund Royal Fidelity Int'l Fund - High Yield Fund Royal Fidelity Int'l Fund - Alternative Strategies Fund

VOLUME

2,500 1,000 400 500

2,000

VOLUME

EPS$ 0.361 0.932 -0.306 0.283 -0.973 0.000 -1.465 0.638 0.573 0.171 0.627 0.102 0.330 0.000 1.129 0.679 0.610 0.293 0.543

DIV$ 0.080 1.130 0.000 0.230 0.000 0.000 0.000 0.320 0.220 0.120 0.620 0.060 0.050 0.084 0.320 0.500 0.200 0.120 0.580

P/E 12.2 18.7 N/M 13.6 N/M N/M -2.1 13.9 10.7 24.0 16.0 25.3 4.8 N/M 5.4 16.2 10.3 11.8 23.0

YIELD 1.82% 6.48% 0.00% 5.97% 0.00% 0.00% 0.00% 3.60% 3.59% 2.93% 6.17% 2.33% 3.13% 1.10% 5.25% 4.55% 3.17% 3.47% 4.64%

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.00% 0.00% 0.00% 0.00% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 7.00% 6.50%

INTEREST 6.00% Prime + 1.75% 6.95% 4.00% 4.25% 4.25% 4.50% 4.50% 6.25% 6.25% 4.00% 4.25% 4.50% 6.25% 3.50% 3.88% 4.25%

NAV 2.15 4.13 2.00 179.39 153.02 1.55 1.68 1.63 1.09 7.15 8.14 6.41 11.26 11.68 10.24

YTD% 12 MTH% 1.23% 4.12% -0.16% 5.10% 0.74% 2.38% 4.66% 3.89% -0.25% 4.57% 1.04% 4.26% -1.06% 2.15% 0.58% 3.61% -0.48% 4.84% -1.08% 1.77% -5.96% -3.05% 1.90% 4.59% 7.24% 11.96% 2.77% 3.88% 3.94% 4.69%

MATURITY 31-May-2018 19-Oct-2022 20-Nov-2029 30-Jul-2018 16-Dec-2019 30-Jul-2020 15-Dec-2021 30-Jul-2022 15-Dec-2044 30-Jul-2045 26-Jun-2018 26-Jun-2020 26-Jun-2022 26-Jun-2045 15-Oct-2018 15-Oct-2020 15-Oct-2022 NAV Date 30-Apr-2018 30-Apr-2018 26-Apr-2018 31-Mar-2018 31-Mar-2018 31-Mar-2018 31-Mar-2018 31-Mar-2018 31-Mar-2018 30-Apr-2018 30-Apr-2018 30-Apr-2018 30-Apr-2018 30-Apr-2018 30-Apr-2018

MARKET TERMS BISX ALL SHARE INDEX - 19 Dec 02 = 1,000.00 52wk-Hi - Highest closing price in last 52 weeks 52wk-Low - Lowest closing price in last 52 weeks Previous Close - Previous day's weighted price for daily volume Today's Close - Current day's weighted price for daily volume Change - Change in closing price from day to day Daily Vol. - Number of total shares traded today DIV $ - Dividends per share paid in the last 12 months P/E - Closing price divided by the last 12 month earnings

YIELD - last 12 month dividends divided by closing price Bid $ - Buying price of Colina and Fidelity Ask $ - Selling price of Colina and fidelity Last Price - Last traded over-the-counter price Weekly Vol. - Trading volume of the prior week EPS $ - A company's reported earnings per share for the last 12 mths NAV - Net Asset Value N/M - Not Meaningful

TO TRADE CALL: CFAL 242-502-7010 | ROYALFIDELITY 242-356-7764 | FG CAPITAL MARKETS 242-396-4000 | COLONIAL 242-502-7525 | LENO 242-396-3225

the rest of the private sector in terms of the magnitude of the VAT rate increase and the narrow 30-day window in which to implement - and comply with - the changed rate and exemptions.

“The push was to see if the government would contemplate a lower percentage of VAT, and if there would be more time to implement and comply,” the source said, pointing out that the sector has multiple existing contracts where a 7.5 percent rate is locked in.

The fear is that the VAT hike will disrupt, and cutoff the 2018 first quarter momentum generated by a combination of Baha Mar’s opening and lack of “cannibalisation” with Atlantis.

Stopover visitors to the destination grew by 18 percent year-over-year, with “double digit” expansion continuing into the second quarter, as The Bahamas attracted an additional 63,000 air arrivals.

“Hotel performance indicators - based on a survey of large properties within New Providence - improved over the first quarter, as total room revenue grew by 39 percent,” the Central Bank said. “This outturn reflected a 26 percent increase in room nights sold, and a 10.9 percent gain in the Average Daily Room Rate (ADR) to $273.59.

“Indications are that the positive tourism industry trends were sustained during the month of April, as partial data from the Nassau Airport Development Company

(NAD) showed a 7.9 percent expansion in total departures - excluding domestic passengers - outpacing the 4.4 percent gain in the prior year.

“In terms of the components, US passengers grew by 6.8 percent, surpassing 2017’s 2.3 percent advance, while non-US international departures rose further by 14.3 percent compared to 17.9 percent in the prior year.”

The Central Bank attributed the improved showing to Baha Mar bringing extra high-end room capacity online, along with “intensified marketing campaigns” and severe weather that impacted The Bahamas’ major US source markets.

“Data from the Ministry of Tourism showed a 2.8 percent improvement in total arrivals, vis-à-vis a 2.2 percent decline in the prior period,” the Central Bank added.

“This outturn reflected an 18 percent expansion in the high valueadded air segment, a reversal from the previous year’s 9.4 percent contraction. Meanwhile, sea arrivals decreased by 1 percent, following a 0.2 percent softening a year ago.

“An analysis by first port of entry, revealed that air visitors to New Providence surged by 19.5 percent. However, a 9.1 percent fall-off in the dominant sea component led to a 1.8 percent decline in total tourist arrivals, vis-à-vis 2017’s 7.3 percent gain.”

NOTICE

NOTICE is hereby given that WILLY PAUL of #44D Taylor Street, New Providence, The Bahamas is applying to the Minister responsible for Nationality and Citizenship, for registration/naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/ naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 29th day of May, 2018 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, Bahamas.

NOTICE

NOTICE is hereby given that DOROTHY SEJOUR of #46W Gladston Terrace, Freeport, Grand Bahama, The Bahamas is applying to the Minister responsible for Nationality and Citizenship, for registration/naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twentyeight days from the 5th day of June, 2018 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, Bahamas.