By Royston Jones Jr.
Nassau Guardian Staff Reporter
NASSAU, Bahamas -- More than two years into its term, the ruling Progressive Liberal Party (PLP) has failed to fulfill many of its “ambitious campaign promises of economic and fiscal reform”, the US Department of State said in its latest report on the investment climate in The Bahamas.
The report, titled “2014 Investment Climate Statement - The Bahamas” was released on June 26.
“Proposed initiatives included the creation of 10,000 new jobs, implementation of a national mortgage bailout plan and returning the majority shares in the national telecom company to state control,” the report read.
“Two years later, many of these campaign promises remain unfulfilled.”
In the lead-up to the May 7, 2012, general election, Deputy Prime Minister Philip Brave Davis said that a PLP government would create 10,000 “immediate jobs”.
In February 2013, Davis defended that pledge and said he still believes the party will be able to deliver on that campaign promise.
As it relates to the government’s mortgage relief plan, Davis insisted in March that the plan is not dead.
But the plan, which was projected to assist 1,100 homeowners, actually helped “four or five” people, according to Prime Minister Perry Christie.
Minister of State for Finance Michael Halkitis has said on more than one occasion that the government intends to rework the program.
As of June 11, the deal between Cable and Wireless Communications and the government to transfer nearly two percent of the Bahamas Telecommunications Company’s shares in a foundation on behalf of the Bahamian people had still not been finalized.
The deal was announced in January.
The report said “lackluster growth and continuing high unemployment” have encouraged a shift in the government’s policy toward a more aggressive and coordinated pursuit of new foreign direct investment as well as a renewed effort to implement promised reforms.
“After consulting with policy advisors -- the IMF (International Monetary Fund) and international experts -- the [government] acknowledged that its revenue base was extremely narrow and ill-suited to the expanding needs and demands of modern Bahamian society,” the report said.
“This explicit recognition inspired several policy changes, including expenditure cuts that resulted in a narrowing of the deficit by 22.6 percent to $209 million and a growth in reserves to $912 million in January 2014, as well as an overhaul of the existing tax system to include a proposal to introduce a value-added tax (VAT) in an effort to broaden the tax base.”
The government intends to introduce VAT on January 1, 2015, at a rate of 7.5 percent.
It had originally proposed to implement the tax on July 1, 2014, at a rate of 15 percent.
The report said The Bahamas continues to struggle with high unemployment, which at last report was 15.4 percent.
However, it acknowledged that figure was down from the decade-high unemployment rate of 16.2 percent.
The report also referenced a Department of Statistics report in April that showed economic growth in The Bahamas in 2013 fell to just under 0.7 percent.
The IMF had projected economic growth that year to be 1.9 percent.
“Sluggish implementation of reforms coupled with growing public debt, a narrow revenue base, and heavy dependence on customs and property taxes led Moody’s to conclude in early 2014 that the prospects for growth in The Bahamas were limited,” the report said.
Both international agencies Moody’s and Standard & Poor’s downgraded the country’s credit rating in 2013.
The report said The Bahamas maintains a relatively stable environment for investment and demonstrates a long tradition of parliamentary democracy, respect for rule of law and security of life and personal property.
But the report said, “In recent years, The Bahamas’ competitive edge as an investment destination, relative to other small island developing countries in the region, has deteriorated.”
It also noted that The Bahamas is the only country in the Western Hemisphere that has not acceded to the World Trade Organization.
“While its goals are commendable and vital to economic growth, the [government] will likely face continued internal and external obstacles to their successful implementation,” the report said.
The department has published over 80 Investment Climate Statements for 2014.
Republished with permission of the Nassau Guardian