By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Politicians “have no business being in power” if they fail to address the Bahamas’ fiscal peril, a reform advocate warned yesterday, adding that another Matthew-type hit could produce a 115-120 per cent debt-to-GDP ratio.

Robert Myers, a principal with newly-formed civil society group, the Organisation for Responsible Governance (ORG), said Matthew had delivered the ultimate incentive for the Bahamas “to get our fiscal house in order”.

With the Government facing a balancing act between financing disaster relief and avoiding a ‘junk’ creditworthiness downgrade, Mr Myers argued that aspiring politicians did not deserve to be elected if they failed to address the Bahamas’ fiscal woes - and a plan for tackling them - during the upcoming election campaign.

Emphasising that the country would “have been in real trouble” had Matthew scored a direct hit on Nassau, as opposed to its eye passing some 15 miles away, Mr Myers added that the “failure to save for a rainy day has come upon us”.

He told Tribune Business: “We’ve got to get our house in order before we have one of these massive events. If we have a global recession or a Category Four or Five storm hits Nassau, our debt-to-GDP could go to 115-120 per cent.”

The Bahamas’ debt-to-GDP ratio, as measured by the Central Bank’s revised 2016 second quarter report, currently stands at just below 75 per cent - a figure that is still in excess of the 70 per cent ‘danger threshold’ established by the IMF.

With Hurricane Matthew having inflicted a $600 million repair bill, according to Prime Minister Perry Christie, the Government’s Budget projections and medium-term fiscal consolidation projections have been massively thrown off.

The Christie administration has already been forced into $150 million of unanticipated borrowing to finance Matthew-related infrastructure and public building repairs, plus assist uninsured Bahamians and small and medium-sized (SME) businesses.

Mr Myers, meanwhile, echoed the concerns of others in the private sector in questioning what the Government has been using its Value-Added Tax (VAT) revenue windfall for, given that it has still been running deficits and increasing the national debt.

“None of that went to pay off the $6 billion-plus debt,” he told Tribune Business, “and they have no provisions for this type of event.

“They continue to spend; it’s just reckless. We’re not anywhere near any kind of fiscal headroom or provisioning for a rainy day. It has now come upon us.”

Suggesting that Matthew had produced “the strongest winds New Providence has seen in 50 years”, despite being just a Category Three or Four storm, Mr Myers said it was “a God send” that the storm’s eye did not move over Nassau directly.

“If that had gone over Nassau, we’d have been in real trouble,” he added. “Thank God Nassau was 10-15 miles away from the eye wall and the centre of the storm. We were lucky.”

Still, Mr Myers emphasised that Matthew and its aftermath had delivered probably the strongest warning yet that the Bahamas needed to repair its fiscal balance sheet.

He suggested that should a similar catastrophic disaster strike in the near future, be it another powerful hurricane or global economic depression, then the Bahamas would be struggling to find the financial resources to survive.

“It’s another sign that we’d better start acting responsibly or we’re going to meet our fiscal peril,” Mr Myers told Tribune Business. “That message is now more evident than it has been before.

“We’re seeing what that destruction looks like, and the impact it will have.”

He implied that Matthew should act as a wake-up call to politicians from all parties that fixing the Bahamas’ fiscal problems should be among the top priorities in the general election campaign.

“We’ve got to get leaders in power that understand the importance of righting the fiscal ship,” Mr Myers told Tribune Business.

“If they’re not talking about that on the campaign trail, if that’s not high on their agenda or their manifesto, they have no business being in power. If not, it means they care not for the economic health of the country, and we want no part of it.

“If the constituents and voters don’t understand that, they’ll get what they deserve.”