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TUESDAY, SEPTEMBER 21, 2021
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Moody’s throws wrench into PLP’s VAT cut plan • Slash will ‘not hold the line’ with rating agencies • Gov’t warned election promises face ‘stark reality’ • Any initiatives ‘must protect Gov’t revenue base’
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Davis administration’s pledge to slash the VAT rate to 10 percent has been undermined by Moody’s downgrade of The Bahamas’ creditworthiness, Tribune Business was told yesterday. Matt Aubry, the Organisation for Responsible Governance’s (ORG) executive director, said such a cut would “not hold the line with Moody’s and other rating agencies” that are watching very carefully to see how the new government tackles The Bahamas’ fiscal, economic and COVID-19 crises. Agreeing that Moody’s action will at the very least complicate the Government’s efforts to deliver on a key pre-election
(l) GOWON BOWE (r) MATT AUBRY pledge, he added that all such campaign promises now face “a very stark reality” when it comes to delivering and executing on them. Mr Aubry said that while the Progressive Liberal Party (PLP) had placed “a lot of stock” in
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Bahamas GDP rebounds 4-8 months after storms By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Bahamas has returned to pre-hurricane gross domestic product (GDP) levels between four to eight months after each of the last four major storms struck this nation, a study has found. An Inter-American Development Bank (IDB) report, produced by four
authors on the impacts of Dorian, Irma, Matthew and Joaquin, found that this country’s economy rebounded relatively quickly despite the combined $4.4bn worth of damage they inflicted. This, though, is likely explained by the fact that New Providence, which generates roughly 70-75 percent of the country’s economic output (GDP), was not directly impacted
by any of these storms apart from Hurricane Matthew which failed to score a direct hit in October 2016. Measuring the storms’ impact that measured night light intensity, or luminosity, before and after the hurricanes, the IDB report said: “The economic recovery times to achieve pre-hurricane GDP levels took between four and
eight months on average for the hurricanes studied. “The results show that The Bahamas experiences a decrease in the year-toyear nominal growth rate during the month and quarter of a hurricane impact event, but does not show a contraction of GDP in the year of the event. However, this does not mean that the damages are insignificant.
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Financial services group in $12m HQ expansion By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net BAHAMIAN regulators have hailed a financial services group’s expansion into online banking, and its $12m investment in a new head office, as signalling that this nation remains a “viable” jurisdiction for the industry. Christina Rolle, the Securities Commission’s executive director, said in a video accompanying the FxPro Group’s groundbreaking near Lyford Cay that the move showed The Bahamas remains competitive in “niche areas” despite the financial
L-R: CHRISTINA ROLLE, executive director, Securities Commission of The Bahamas; Nicholas Wright, chief operating officer, FxPro; John Rolle, governor, Central Bank of The Bahamas; Andrew Pike, chief executive, BankPro. services industry’s contraction over the past decade. FxPro, which is currently based at the Albany
Financial Centre, has been operating in The Bahamas since 2017 as online broker/dealer focused
primarily on contracts for difference (CFD) - a form of derivative. “This expansion into banking means that people still see The Bahamas as a viable place for financial services,” Ms Rolle said. “I think that’s important especially with the amount of contraction being seen in the industry; that we still have niche areas where The Bahamas has a good product offering, we have a good platform in antimoney laundering/counter terror finance regulation, so we’re still seen as a good place to do business.”
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Environmental nod sought for $100m BPL power plant By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net BAHAMAS Power & Light (BPL) is moving to obtain full environmental clearance for an up to $100m investment in new generation plant at Clifton Pier that is designed to improve energy efficiency and reliability. The Environmental Impact Assessment (EIA) for a project billed as creating between 150200 construction jobs has been released ahead of an October 12 virtual public consultation being organised by the Department of Environmental Planning and Protection (DEPP).
Previous public consultation responses have suggested the new plant, known as ‘Station D’, will be financed from the proceeds of BPL’s proposed $535m rate reduction bond (RRB) that has yet to be placed. Whether the bond will actually be issued remains to be seen, as that decision now rests with the Davis administration, but BPL executives have said “other financing options will then be considered” if the $535m is not raised. Amendments to the bond legislation need to be passed by Parliament before BPL’s mammoth refinancing can take place, which will likely push the exercise into next year. Construction on ‘Station
BPL HEADQUARTERS D’ is supposed to take 14 months once all necessary permits are obtained, and it will provide between 82-108 Mega Watts (MW) of energy via six generators capable of using natural gas, heavy fuel oil (HFO)
or automated diesel oil (ADO). Together with Clifton Pier’s ‘Station A’, the new plant will combine to provide between 200-220
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PHILIP DAVIS
‘Take all nasty decisions during first 12 months’ • Ex-GBPA attorney: Selloff loss-making SOEs • Says pain now as voters have ‘short memories’ • PM: ‘We’re not elected to tinker at the edges’ By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net AN EX-GRAND Bahama Port Authority (GBPA) counsel has urged the Davis administration to take all “nasty” decisions, such as selling-off loss-making state-owned enterprises (SOEs), during its first two years in office. Carey Leonard told Tribune Business this is critical to both The Bahamas’ future and the administration’s prospects of securing re-election given that many voters “have short memories” and will forgive early
CAREY LEONARD pain if the country’s economic fortunes have turned around. “Whoever came in would have to make very difficult
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BTVI chooses its first vice-president By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Bahamas Technical and Vocational Institute (BTVI) has named former University of The Bahamas executive, Dr Linda Davis, as its first vice-president. Dr Davis, who will be vice-president of academic affairs, has served in higher education administration for more than 20 years. She has held posts at the College of The Bahamas (COB), the former Wheelock College (Boston, US) and back to University of The Bahamas (UoB) where, most recently, she served as provost. BTVI’s president, Dr Robert W. Robertson, said: “I am excited and honoured to be working alongside a veteran, wellrespected academician. I believe she will execute her duties with precision,
helping to support the transformation of processes – all in alignment with our strategic objectives. “We are incredibly fortunate to have Dr Davis serve the BTVI community. I believe she will become one of the architects of a strong future for our organisation, which has a very serious national mandate, particularly in bridging the skills gap.” Beginning her career in higher education as a faculty member at COB in the humanities, followed by teacher education, Dr Davis subsequently moved into administration as assistant chair, then dean, two vice-presidential level positions and the international deanship at Wheelock before being appointed UoB’s first provost. Dr Davis said: “I consider it a privilege to have been selected to serve as BTVI’s first vice-president
GB Utility blames shipper for $5m RO plant setback By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net GRAND Bahama Utility Company (GBUC) has blamed another “disappointing setback” for construction of its $5m reverse osmosis plant on an error by its shipping company. The Grand Bahama Port Authority-owned water supplier, in a statement, said one of the containers containing the plant’s filtration units has yet to arrive in Grand Bahama because it was not loaded with the others that have now reached the island.
While two of the three containers shipped from Belgium have arrived, GB Utility Company added that “a bill of lading error on the part of the shipping company” meant the third had to be placed on a later voyage and will now arrive during the second week of October. The shipping company was said to have apologised for the error, which GB Utility said has caused “another major delay in progressing to the final phases of testing and commissioning of the reverse osmosis plant”. Philcher Grant, GB Utility’s director of operations,
DR. LINDA DAVIS of academic affairs at such a critical time in our country. Our challenge as an institution will be to think out of the box, finding new ways to educate and help students adapt to the rapidly changing needs of industry. I am looking forward to the exciting journey ahead.” said: “This has indeed been a disappointing setback. Our team, along with our contractors Bahamas Hot Mix [BHM], have been working diligently - despite the added challenges of working through a pandemic - to ensure that this critical project would be commissioned as scheduled. “We know what this means to the Island and, though this particular aspect is beyond our control, we extend apologies to our customers for the further delay.” GB Utility confirmed that the current 25 percent discount for customers without potable water will remain in place until the new plant is fully commissioned, as will free water sites in communities where potable water has not yet been restored.
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Tuesday, September 21, 2021, PAGE 3
Minister targets financial stability By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net A NEWLY-appointed Cabinet minister yesterday said the Davis administration’s first objectives will be to “decelerate” the Government’s rate of borrowing and improve the ease of doing business. Michael Halkitis, minister for economic affairs, added that the Government will also seek to develop a credible debt management strategy to “stabilise the country’s finances”. “Our partners in the financial services industry, the banks etc, are telling us that what we need to do is come with a good, credible debt management strategy,” he added. The national debt stood at $10.356bn at endJune 2021, with a projected fiscal deficit of $951.3m set
to add significantly to that in one year’s time. Despite the task ahead, Mr Halkitis added: “So, first orders of business: Stabilise the finances, as far as the revenues, and put in place a debt management strategy, so that we can decelerate the rate of borrowing and begin to move towards a more balanced fiscal situation.” His ministerial areas of responsibility include “digitisation” and the “ease of doing business”, along with elements of public finance and budgeting. Mr Halkitis, who was minister of state for finance under both Perry Christieled administrations, will be working closely with the still-unnamed minister for finance. Turning to the ease of doing business, he added: “What we need to do is
Delivery firm: Economy needs major ‘kickstart’ By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net A DELIVERY firm yesterday said revenue improvement needs more than a delayed curfew start, adding that the economy must also be sparked into life to increase employment. Granville Collie, MUTRU’s chief executive, told Tribune Business yesterday that more people have to get back to full-time work in order for his business to pick up. “Things are pretty much the same, a lot of businesses are still closed down. I guess we have to see what happens with the curfew extensions and with the new government being in and all of that,” Mr Collie said. “With a lot of our vendors being limited, I wouldn’t say anything has changed as much. We’re actively marketing in order to get new business, but in terms of previous clients, we haven’t seen that much change from them.” Merchants are still feeling the pinch of COVID-19’s economic fall-out regardless of the nightly curfew’s start being pushed back from 9pm to 11.59pm. Despite the macroeconomic challenges, however, Mr Collie said: “We’re moving in the right direction with some lifting of the restrictions. We just have to wait and see what the new government will do now.
“I have seen a few members of parliament speak about the total removal of the curfew, so there is some hope and we are very hopeful for the new government. We hope that with the ease in restrictions things will begin to go back to normal. “Other than that I have not seen any pick up in sales volume since the curfew has been extended. The volume for this year has pretty much been the same. Earlier on in the year it was trending upwards, and then after a while things started to go down and since then we haven’t seen really that much pick up in business. MUTRU has only picked up two additional business clients for the year. “Even for our vendors things are slow all around. I know we added some shoe vendors, but even with that people were still wondering if inperson sessions were going to continue so even they didn’t have much business coming in and that would pass on to us in terms of deliveries,” Mr Collie said. “I think the economy has been at a standstill for several months now, and hopefully things start to move in the right direction in terms of the economy. We definitely need something to kickstart our economy a bit more. A lot of businesses still feel the brunt of it, and a lot of people generally need to get back to work, generally speaking.”
MICHAEL HALKITIS firstly engage all of our partners in the industry. All of the stakeholders, business people, the legal community and government to see what these hurdles are.” He added that the private sector always complains about the time it takes to get permits and approvals, so there needs to be a “holistic approach”.
Underscoring the negative connotations from hearing consistently that doing business in The Bahamas is “difficult”, he maintained that to combat this negative perception all stakeholders must come together to discuss how to fix this and incorporate solutions into his ministry’s strategy. Mr Halkitis added: “When we speak of the ease of doing business, the pandemic has forced a lot of Bahamians to become entrepreneurs, so a lot of people have done it by necessity. “When we talk about digitisation, that creates opportunities when we talk about the ease of doing business. More people are by choice becoming selfemployed, and so we have to look at ways to support
them and digitisation does it throughout the islands.” The Government has also recalled Simon Wilson, financial secretary, from gardening leave where he had been placed by the Minnis administration for close to four years. He will replace acting financial secretary, Marlon Johnson, with both men now working to ensure a smooth transition. Tribune Business was informed prior to the 2017 general election that the Free National Movement (FNM) planned to replace Mr Wilson with Mr Johnson, but both this newspaper and its contact dismissed the suggestion. The Minnis administration sought to transfer Mr Wilson to the Central Bank and, when he objected, simply sent him home on full pay. This newspaper
and many observers felt the move was at the very least premature, as Mr Wilson was still working to bed in initiatives such as the Revenue Enhancement Unit, which he launched in 2016 after Hurricane Matthew, and real property tax reforms via Tyler Technologies. A Moody’s report said the Revenue Enhancement Unit garnered $90m in additional revenue during its first six months, an average of $15m per month. Taxpayers also had to contend with thousands of dollars being spent on paying full salaries to two financial secretaries over a four-year period, although this is no reflection on either Mr Wilson or Mr Johnson.
RECOVERY NEEDS MORE THAN SHORTENED CURFEW By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net WHILE grateful for the increased operating hours created by a shorter curfew, Bahamian businesses say other obstacles must be overcome before they and the economy can see a turnaround. Vasco Bastian, owner/ operator of Esso’s East Street South and Soldier Road location, told Tribune Business that the first act by newly-elected prime minister Philip Davis QC pushing the nightly curfew’s start back to 11.59pm from 9pm - does not necessarily mean people will come to his station and spend more money on fuel. He argued: “The curfew being eased is not going to have a huge difference. Most people are still only putting in the minimum
amount of gas they can afford, so extended hours doesn’t mean we will have more revenue. “My light bill has gone up now, my salary has also gone up because now I have to pay people for an extra couple of hours. My margins haven’t increased, my revenue hasn’t increased.” Mr Davis has increased the hours during which many Bahamian businesses, including food stores, fastfood and other restaurants, and the likes of gas stations can operate at night. The latter used to be 24/7 operations, although they now have recovered all but seven hours of that period. Mr Bastian, though, said an improvement in the wider economy is required before business owners such as himself will feel at ease. “We are going to keep the same level of staff and, in fact, we may even reduce the amount of hours because we have to
balance this thing properly. This has to make sense. The economy is still shrinking; we were just downgraded by Moody’s on Friday,” he added. “I wish this new government all the best. I want Brave Davis to do well for this country and the economy because if Brave Davis does well, we all will do well.” Jacques Carlino, owner/ operator of the Blue Sail Bar & Grill, said that while he was happy to have extended hours of operation, he is also cautious due to the continuing high number of COVID-19 cases. He added: “I’m also concerned with the way this country is struggling right now with COVID-19. As a business owner I am excited to be able to operate longer hours, but I’m also worried that we are doing it too soon.”
Despite being under a 9pm curfew for the past several months, Mr Carlino said he has been able to return 30 of his staff. He added: “I will be honest with you, when the curfew moved back to 9pm I had lost 60 percent of my business. I was able to reemploy a lot of people, so I decided to keep everybody on and just reduce the hours. “So now we’re going to put back hours to the staff and hope that business is going to start, because no tourist will come to the restaurant when we had to close early.” Explaining that he had to stop taking orders at 7pm, Mr Carlino said: “We are happy for the change, it is very much welcome. We are excited for the change. I have to see how everything is going to line up, but I’m very positive that we’re going to start working, so let’s see where we go.”
NEW GOV’T URGED TO BOOST BUSINESS EASE By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net
SMALL businesses are urging the new government to further improve the ease and cost of doing business while providing more access to financing. Sean Bain, manager at J.S. Steel, told Tribune Business there were three things the Philip Davisled administration must do to assist the private sector immediately. “We need more concessions.,” he argued. “First of all Value-Added Tax (VAT) is killing us. The new government needs to look at reducing VAT as well as
Customs duties. It’s just too expensive to do business in The Bahamas.” That may be difficult, given the extent of The Bahamas’ fiscal crisis which was further highlighted by Moody’s latest downgrade of the country’s
creditworthiness on Friday. Mr Bain, though, added that the administration also needs to look at the way the government interacts with businesses, arguing that there is a lot of redundant work being done in government agencies.
He said: “We bring in a lot of flat racks and they are just covered by a tarp. Before things changed we could have brought in our stuff, pay duty, pay road tax and bring our stuff in the yard.
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MOODY’S THROWS WRENCH INTO PLP’S VAT CUT PLAN FROM PAGE ONE cutting the VAT rate by two percentage points, even if just for a year, The Bahamas’ dire fiscal circumstances combined with Moody’s warning meant any revenue foregone as a result needs to be “offset” by gains in other areas that have yet to be identified. For the rating agency made clear its “negative outlook” on The Bahamas, which signals there could be another downgrade plunging the country’s creditworthiness further into non-investment grade or ‘junk’ status, is being heavily influenced by the sharp COVID-induced revenue contraction. “The pace of the economic recovery, and particularly tourism activity, will directly affect the pace of fiscal consolidation and how quickly debt begins to decline,” Moody’s said of its “negative outlook” rationale. “The reliance on indirect taxation - VAT and excise taxes - makes government tax collection more sensitive to the speed of the economic recovery. “A slower recovery would place downward pressure on revenue and limit the speed of fiscal consolidation and prospects for
debt stabilisation. Largerthan-expected fiscal deficits in turn would increase reliance on external market borrowing and could create external liquidity pressure.” This substantially reduces the Government’s space for a VAT cut. While virtually all Bahamian businesses and consumers would like nothing more than such a rate reduction, even a temporary one for 12 months, there are substantial pressures from the outside via the likes of the International Monetary Fund (IMF), Moody’s and Standard & Poor’s (S&P), the multilateral institutions, lenders and creditors against one. They are all placing The Bahamas under increasingly intense scrutiny over its $10.356bn national debt and projected $951.3m deficit, waiting for austerity measures and a detailed debt management plan for setting this nation’s public finances back on a more sustainable path. Mr Aubry, meanwhile, was backed by Gowon Bowe, Fidelity Bank (Bahamas) chief executive, who argued that the Government should instead focus on eliminating all the VAT exemptions introduced by the Minnis administration
so that The Bahamas could revert to the “broad-based” taxation model it was initially praised for. Besides taking the tax exemption away from higher income-earning Bahamians that did not need, Mr Bowe explained that the revenues generated could be re-directed to assist lower income persons. He also called for the conditional cash transfer (CCT) initiative, featuring pre-paid and debit cards, to be relaunched as a means of distributing these funds to those in need. “That will not hold the line with Moody’s and other rating agencies. That’s where we are now,” Mr Aubry told Tribune Business of the 10 percent VAT proposal. “All these promises have to be brought forward in a very stark reality. We’re over-borrowed with very little discretionary funding, and dependent on foreign currency borrowing. “It puts us in a very vulnerable place. If we think about meeting the promise of a reduction of VAT, it has the implications of where we make up for that and from what sources. This government is putting a lot of stock in that, and whether we’re able to offset what we’d lose from a
New Gov’t urged to boost business ease
two percentage point VAT reduction is something that’s going to have to be looked at.” Mr Bowe, meanwhile, warned that the proposed VAT rate cut needed to be backed up by economic analysis, modelling and projections that show it will have “zero impact” on the Government’s revenue intake given the austerity pressures from outside The Bahamas. “You cannot reduce the rate without ensuring you protect the revenue base,” he told Tribune Business. “We need to make it not a campaign promise, but make it a net positive or net neutral position. I look at 10 percent not disparagingly, but to say it had better be well-modelled and have specific objectives around it to show it is net positive or net neutral” on revenue. The PLP, while in Opposition, did not produce any economic modelling or analysis to show whether the proposed cut would reduce or boost government VAT revenue. Chester Cooper, now deputy prime minister and minister responsible for tourism, investments and Immigration, suggested the lower rate would boost economic activity and
increase revenues by $200m annually. This, though, was immediately countered by then-Senator Kwasi Thompson, former minister of state for finance, who countered that the one-year VAT rate cut will “destabilise the economy” and government finances by costing the Public Treasury $100m in revenue. Now-prime minister, Philip Davis QC, hit back by arguing that the VAT decrease will help hard-hit families and businesses while also helping to stimulate the economy by incentivising more consumer spending and a higher transaction count. Mr Bowe, though, challenged the latter theory given COVID-19’s devastating impact on jobs, incomes, purchasing power and living standards. “There’s the theoretical argument that when you lower the rate, people consume more, but you have to bear in mind that people today are not working, and their buying power and consumption has taken a significant hit,” he added. The Fidelity Bank (Bahamas) chief added that, before focusing on a VAT rate cut, the Government should instead abolish the
exemptions introduced by the Minnis administration and thus lower the prices of numerous items apart from those in the so-called “breadbasket”. To minimise the effect on lower income Bahamians, Mr Bowe said the Davis administration needs to have as “a high priority” the reinstatement of the conditional cash transfer (CCT) initiative so that extra social security funds can be directed to persons who “need that support for the dignity of their lifestyle”. This would be funded via the extra VAT generated from higher income earners, and be consistent with the recommendations given by the New Zealand consultants prior to the initial implementation of a lowrate, broad-based VAT of 7.5 percent on January 1, 2015. Mr Davis at the weekend sought to give his administration some flexibility on when the promised VAT rate cut would be implemented, suggesting that an announcement will be made “in the coming weeks” once a minister of finance has been appointed. That post was not filled as of last night.
FROM PAGE THREE
material and with that we have to pay extra for that.” Describing this as a waste of time, Mr Bain said: “All they could have done was check under the tarp before we left the dock. It’s things like this is what needs to be made easier for businesses like us. They also need to increase funding opportunities for small businesses.” Manera Rolle, owner/ operator of Willows Wheelz, added: “I think this new administration should make it easier for small businesses to get their business licenses. “We also need help getting credit card machines. In this new cashless environment, small businesses need help with getting credit card machines from the commercial banks. It took too long for me to get one and I had to work with someone inside the bank in order to get one. I just could not order one and get one because I applied for one.” “A lot of small businesses need help getting small loans,” she added, arguing that the Small Business Development Centre (SBDC) is not doing enough for small and medium-sized enterprises (SMEs) because funding is not the only solution by itself. “They need a start-up kit. Don’t just give
them $5,000 and say to them go and do your business plan. That’s not how that works,” Ms Rolle said. Gregory Sherman, owner/ operator of G.S. Landscaping Company & Property Management, said of the election: “This was a humbling experience. I am shocked and I am disappointed that the Bahamian people made it personal for Dr Minnis as opposed to looking at the bigger picture, and that really is what ticks me. “As I drive around, I see a lot of parties at these Progressive Liberal Party headquarters. It’s like everyone has in their mind that COVID-19 is gone.” As for what the new administration should to assist the private sector, Mr Sherman replied: “Before we get to anything like reducing taxes and import duties, you have to really go in and assess the situation before you make any moves because we had to borrow a lot of money just to sustain us in this pandemic. “People don’t get that. That was a big deal and if you look around the world compared to other countries we took care of some of our people during the pandemic.”
“Now I see where the Customs department wants to come into the yard and look under the tarp to make sure you have the right
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Tuesday, September 21, 2021, PAGE 5
‘TAKE ALL NASTY DECISIONS DURING FIRST 12 MONTHS’
FROM PAGE ONE decisions,” the now-Callenders & Company attorney explained. “This administration will have to sell-off the money-losing corporations, such as ZNS and Bahamasair. There’s not going to be anything to sell quite frankly. “What does Bahamasair have other than debt? They have some aircraft which are probably worth more if they are written-off and they get the insurance claim. And you have the situation with ZNS. Who needs ZNS? You have radio stations and TV stations all over the place. It has no value, and you save tens of millions of dollars a year by not operating them any more.” Bahamasair’s subsidy quadrupled to over $76m, four times’ its original 20202021 Budget allocation of $19m, after COVID-19 left it grounded for much of that period and, when it could operate, with muchreduced passenger load factors. The national flag carrier has cost Bahamian taxpayers well over half a billion dollars to keep in the air since it was founded in the early 1970s just after independence. Over-staffed, the airline has often been used by successive governments
as an employment agency for family, friends, lovers, political supporters and constituents. However, others argue that Bahamasair was never intended to be profitable but, instead, serve as a transportation lifeline for remote Family Island routes that would never be served by private carriers fearful of incurring a loss. Meanwhile, ZNS or the Broadcasting Corporation of The Bahamas (BCB), is in line for a $7m subsidy in the 2021-2022 fiscal year having received a similar amount during the prior year. State-owned enterprises (SOEs) in total will receive almost $426m collectively in taxpayer subsidies this fiscal year, a sum equivalent to just under 19 percent of $2.445bn in projected revenues. The fear of job cuts impacting future election votes has always deterred prior governments from cutting SOE workforces too deeply in the past, but Mr Leonard said at least 25-30 percent of Bahamasair’s workforce would find jobs with private sector airlines while others will use their redundancy packages to become entrepreneurs and self-employed via their own businesses. Arguing that the Davis administration will also
have to implement some form of corporate income tax, he told Tribune Business: “They need to deal with this in the first 12 months. This is because I think the country has borrowed as much as it can before the IMF (International Monetary Fund) gets involved, and we certainly don’t want to be in the company of Greece. “Youth unemployment there skyrocketed, and the IMF made life there miserable and caused a lot of pain. We need to avoid their pain. These sorts of things need to be dealt with. Deal with the nasty things first, and down the road in four to five years it will look a lot more healthy. People have short memories.” Besides the high possibility of new and/or increased taxes, coupled with spending cuts, as austerity measures to tackle The Bahamas’ $10.356bn debt burden and narrow the projected $951m fiscal deficit, other painful reforms - such as those needed to save the National Insurance Board (NIB) and tackle $2bn in unfunded public pension liabilities - will have to be considered by the new administration. Various actuaries have projected that NIB’s $1.6bn reserve fund will be exhausted by 2031 without
reforms that are likely to have increased in urgency due to the $100m-plus COVID payouts. The InterAmerican Development Bank (IDB) said in 2018 that NIB contribution rates must more than double to over 20 percent to prevent a long-term Bahamian pension crisis. It projected that the Government’s total pension liabilities - including those owed to the civil service and public corporation workers - will ultimately grow to 160 percent of GDP, and eliminating this deficit will require NIB contribution rates to rise from the present 9.8 percent to 20.3 percent. “Beyond the medium term, pension liabilities for which the Government is directly responsible including social security commitments, pensions and public entity pensions - amount to 160 percent of GDP and are underfunded,” the IDB said. “Fully funding these pensions would require increasing the social security payroll tax from 9.8 percent to 20.3 per cent - a 107 per cent increase.” NIB contributions, which take the form of a payroll tax, are currently split 3.9 percent/5.9 percent between employee and employer, respectively.
FINANCIAL SERVICES GROUP IN $12M HQ EXPANSION FROM PAGE ONE FxPro Group has acquired a 16,000 square foot double commercial lot on West Bay Street for its sole use as a headquarters building. When construction is completed, it will house both its online broker/dealer operations and new online banking arm, BankPro. Nick Wright, FxPro’s chief operating officer, said: “This is an online bank which will offer seamless trading, transfers and banking services straight off your
phone.” He added that the new head office will take two years to build, with the group having received “some outline planning approvals from Town Planning”. Suggesting that final approvals were near, Mr Wright said he hoped construction could “start within the next week or so”. No media appeared to have been invited to what was a private ground breaking. Describing FxPro as “one of the leading online brokers in the world, Mr Wright said: “We came to The Bahamas about six
to seven years ago with a view to regulate here. We were very successful in that mission.” With FxPro now focused on expanding its business, Mr Wright added: “We always had an ambition to expand into banking and equities trading, and to that end we applied to the Central Bank of The Bahamas for an international banking licence, which we were granted, and as we move towards the end of the year we will be opening our new banking and trading platform, BankPro, which
pretty much offers every banking service straight off your local phone.” BankPro will be headed by Bahamian banker, Andrew Pike, and is targeting a November 2021 opening. Mr Wright said FXPro operates in “almost every country in the world”, although it does a relatively small amount of business in the European Union (EU). “I’m asked a lot: ‘Why regulate in The Bahamas?’. My response is ‘Why not?’” Mr Wright said. “It has a strong regulatory environment, the geography
Should the IDB’s forecast prove accurate, The Bahamas’ 200,000-plus workforce will all take a hit from reduced “take home pay” and suffer a loss of disposable income, leading to reduced living standards. The Prime Minister yesterday pledged to take swift and direct action to counter The Bahamas’ multiple ongoing crises over the economy and the Government’s fiscal health, as well as the public healthcare system that is “collapsing under the weight of COVID-19”. “I want to be clear,” said Philip Davis QC. “We’re not here to tinker at the edges of these problems. We are here to meet them head on.” He added: “We take office not facing one crisis but several. The severity of the fiscal crisis cannot be over-stated....” Pointing out that these woes, together with the COVID-19 pandemic, were “present in the lives of Bahamian families across the country”, he added: “Many thousands of Bahamians are out of work and cannot pay their bills.” Pledging to work with international investors to “increase faith and confidence in our economy”, Mr Davis added that the portfolio handed to Alfred Sears QC, minister of works
and utilities, represented the first time that all government agencies dealing with The Bahamas’ physical infrastructure had been brought together under one roof. In what appeared to be a shot at both former deputy prime minister, Desmond Bannister, and ex-Water & Sewerage Corporation executive chairman, Adrian Gibson, the Prime Minister said: “We are deeply troubled by the fact agencies such as Bahamas Power & Light (BPL) and Water & Sewerage have become more concerned with the lack of transparency and accountability in contracts rather than delivering high quality service.” Asserting that Mr Sears will resolve these woes, Mr Davis added that Mr Halkitis will “play an important role in helping to stabilise the country’s finances” while overseeing financial services and trade, as well as the Government’s ongoing digitisation efforts and improving the ease of doing business. “A lot of people are suffering and there is a lot of work to do,” the Prime Minister added.
is great, and it’s a lovely place to be.” In particular, he added that this nation provides a strong platform for its international trading activities, and said other brokers had followed it to domicile in The Bahamas. John Rolle, the Central Bank’s governor, said of FxPro: “I think their alldigital model of providing financial services is very important and signals the direction of finance in the future, where we’re reaching more and more clientele through digital channels, and it will challenge us as a regulator to continue to build capacity to deal with the kind of issues that are involved with digital services provision.
“It has relevance to what we are trying to achieve in the local economy, because we realise that to reach more of the Bahamian population we have to provide more services through digital channels and deal with all the issues that come from that around consumer protection, data protection, privacy and there’s a national approach that’s necessary.” The FxPro headquarters design has been completed by N & M architects of Sandyport, Nassau, and the main contractors are the Mosko Group and The Bahamas Environmental Group.
ENVIRONMENTAL NOD SOUGHT FOR $100M BPL POWER PLANT FROM PAGE ONE MW of New Providence’s baseload generation. However, the EIA is confusing over Shell North America’s role when it comes to a power plant that the multinational energy giant was supposed to design, build and operate itself, then supply energy to BPL under a power purchase agreement (PPA). ‘Station D’ will be constructed, operated and maintained by Finnish energy giant, Wartsila, with Shell seemingly just involved in supplying the plant’s liquefied natural gas (LNG) fuel from a nearby
regasification plant that will also be built at Clifton Pier. “If the proposed LNG terminal and regasification facilities receive regulatory approval and are constructed, then the current plans call for natural gas to eventually replace HFO and/or diesel as the primary fuel,” the EIA said. “The engines for the proposed Station D project are the most efficient of their size and technology that are currently available, with a thermal efficiency of 44 percent on natural gas and emissions that meet World Bank requirements... “BPL will develop the power plant, and Shell will develop the LNG
plant. BPL will contract Wärtsilä as the contractor for Station D. Upon completion of the new power plant, Wärtsilä will operate and maintain the plant via an operation and maintenance agreement using a fully trained Bahamian workforce. However, the EIA states elsewhere that Shell will have “joint ownership” with BPL and an unnamed group of Bahamian investors. It added: “The power plant component of the project and associated relevant infrastructure will be developed by BPL and the LNG regasification infrastructure, and a multi-fuel jetty will be developed by Shell Gas and
Power Developments B.V. or affiliates (Shell). “The commercial structure of the LNG to Power project, subject to ongoing negotiations, anticipates that the facility will be jointly owned by Shell, BPL and a consortium of local investors.”
BPL CLIFTON PIER
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PAGE 6, Tuesday, September 21, 2021
BAHAMAS GDP REBOUNDS 4-8 MONTHS AFTER STORMS FROM PAGE ONE “On the contrary, the total damage from these four hurricanes was nearly $4.4bn, which is equivalent to about 30 to 40 percent of Bahamian GDP. Additionally, the amount of damage may increase in the future due to the effects of climate change. Therefore, disaster risk reduction and climate
change resilience/adaptation should continue to be a priority in public policy for the country’s macroeconomic and socioeconomic sustainability.” Not surprisingly, given that it impacted New Providence, Hurricane Matthew was found to have inflicted the greatest economic impact on The Bahamas despite the devastation that
Hurricane Dorian’s category give winds and storm surge caused on Abaco and Grand Bahama - the the third and second most populated islands, which together generate about 20 percent of national GDP. “There does indeed seem to be a relation between what islands are affected and the severity of the economic contraction,” the authors found. “Hurricane Matthew had the most severe economic effects in the month of the event (4.4 percent contraction), and although it imposed lower overall costs than Hurricane Dorian, both New Providence and Grand Bahama (the largest islands economically) had the highest costs.” With the most direct hurricane costs inflicted on the tourism, transport and housing sectors, the report added: “These results therefore signal that there would be substantial benefits from ensuring climate-resilient investments and insurance
mechanisms in these three sectors. This calls for their possible prioritisation in climate change adaptation and disaster risk management efforts. “The Bahamas is extremely vulnerable to the effects of natural disasters and climate change. The country has been hit by 25 hurricanes in the last 25 years that have resulted in substantial human and economic losses. “Natural disasters are expected to increase in frequency and intensity going forward as a result of the effects of climate change. Therefore, better understanding the effects of these events on the economy of the country, and promoting measures and reforms to mitigate their effects, is becoming more urgent than ever.” The report reiterated that Dorian inflicted some $2.5bn in direct damage, with indirect costs amounting to $717.3m. “Abaco suffered 87 percent of the
direct costs and Grand Bahama 13 percent,” it said. “Direct costs to the social sector reached $1.6bn (64 percent), with most of that in Abaco. Within the social sector damage, almost 93 percent was in the housing sub-sector. “Approximately 9,000 homes had direct damage, with more than 75 percent of homes in Abaco directly damaged. Direct costs to the productive sector reached $620.9m (24 percent), of which $529.6m (21.2 percent) was in the tourism sector. Direct costs to infrastructure reached $239.1m (9.5 percent), of which 54.1 percent was in the power sector. “The airports suffered high operational damage due to flooding and roof failure due to high-speed winds, and seaports were impacted by waves, storm surge and wind. The transport sector incurred $50.8m (2 per-cent) in direct costs, with 53 percent of the damage on Grand Bahama,
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almost all of it sustained at the Grand Bahama International Airport.” As for the indirect costs, the IDB document added of Dorian: “Of the total, 70 percent was in Abaco, 15 percent in Grand Bahama, and 15 percent in other islands. Indirect costs in the social sector reached $93.2m (13 percent), of which $65m (2.6 percent) was in the housing sector. Indirect costs in the environmental sector reached $27.5m (3.8 percent). “Wave action, storm surge, and high winds produced partial to severe destruction of mangroves, coral reefs, seagrass beds and forests on both Abaco and Grand Bahama. As a result, ecosystems were left in a critical state and pre-existing vulnerabilities were exacerbated, with an expected decrease in ecosystem services provision in the short and medium term.”
STOCKS DROP THE MOST SINCE MAY ON WORRIES OVER CHINA, FED By DAMIAN J. TROISE, STAN CHOE AND ALEX VEIGA AP Business Writers STOCKS on Wall Street closed sharply lower Monday, mirroring losses overseas and handing the
S&P 500 index its biggest drop in four months. Worries about heavily indebted Chinese real estate developers — and the damage they could do to investors worldwide if they default — rippled across markets. Investors are also concerned that the
NOTICE NOTICE is hereby given that JOLYNE ANGEL LUBIN of Coopers Town, Abaco, The Bahamas General Delivery, 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 21st day of September, 2021 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.
U.S. Federal Reserve could signal this week that it’s planning to pull back some of the support measures it’s been giving markets and the economy. The S&P 500 fell 75.26 points, or 1.7%, to 4,357.73, it’s biggest drop since May. At one point, the benchmark index was down 2.9%, the biggest decline since last October. The S&P 500 was coming off two weeks of losses and is on track for its first monthly decline since January. The S&P 500 has gone an unusually long time without a pullback of 5% or more. The Dow Jones Industrial Average fell 614.41 points, or 1.8%, to 33,970.47. The blue-chip index was briefly down 971 points. The
Nasdaq fell 330.06 points, or 2.2%, to 14,713.90. The Hang Seng, Hong Kong’s main index, dropped 3.3% for its biggest loss since July. European markets fell about 2%. “What’s happened here is that the list of risks has finally become too big to ignore,” said Michael Arone, chief investment strategist at State Street Global Advisors. “There’s just a lot of uncertainty at a seasonally challenging time for markets.” The worries over Chinese property developers and debt have recently centered on Evergrande, one of China’s biggest real estate developers, which looks like it may be unable to repay its debts.
NOTICE NOTICE is hereby given that LUBIN VICTOR of Sandilands, Village Road, Nassau, 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 21st day of September, 2021 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.
LEGAL NOTICE
NOTICE Pursuant to the provisions of Section 138 (8) of the International Business Companies Act (as amended), NOTICE is hereby given that Bahamian 244 Limited has been dissolved and has been struck from the Register with effect from 10 March 2021. Lorna Kemp and Beecham Braynen LIQUIDATORS c/o Clairmont Trust Company Limited Pineapple House #4 Lyford Cay P.O. Box SP-64284 Nassau, Bahamas