By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The government is facing “a real conundrum” in devising an effective rental assistance initiative because it would require the banks to “freeze” landlord loans, the deputy prime minister has admitted.

K Peter Turnquest, responding to questions after a Zoom presentation to Old Fort Rotary Club members, said the involvement of three different parties in the tenancy chain represented “a huge challenge” in coming up with a relief programme that works.

He added that a further difficulty facing the Minnis administration was the continued uncertainty over “where the bottom is” in the COVID-19 pandemic, and how much the provision of rental assistance to tenants will ultimately cost given that the government’s financial resources are already being strained to the limit with an $800m deficit now projected for this fiscal year.

Mr Turnquest confirmed that the government has appointed a committee to study, and recommend, how a rental assistance initiative can be implemented, but admitted “this is a huge challenge” given that individual, family and business tenants are all struggling to make due rental payments to their landlords amid the economic lockdown imposed to fight the virus.

“The challenge for us in intervening in this is that we don’t know where the bottom is, and how many people require assistance,” the deputy prime minister added. “We have to look at it from both sides.

“The landlord typically has a mortgage on the property that depends on rental income to service it. If you say to the landlord that you have to give a 30-day or three-month moratorium on rental payments, you have to back that up with the bank giving him a similar moratorium.”

Mr Turnquest added that the various COVID-19 customer assistance initiatives implemented by Bahamas-based commercial banks all involved loan deferrals that merely delayed the payment of due principal and interest payments until a later date when the pandemic has passed.

This does not represent a waiver or forgiveness of the debt, as Mr Turnquest acknowledged by saying: “The interest continues to roll. That’s a real challenge figuring out that conundrum.

“The Government has a committee looking at that, and which will make recommendations to it, and see if we can get financial institutions to freeze loans for a period. I don’t know if that’s possible. We’ll see.”

The deputy prime minister added that a rental assistance initiative could also be exploited by those with the means to still pay their landlord the due sum, but he also pointed out that the Department of Social Services already provides such support to those truly in need.

Tribune Business previously reported that commercial property landlords are “walking a very delicate tightrope” during the COVOD-19 pandemic by making offers of 50 percent rental discounts/deferrals to ease the pain and retain as many of their existing tenants as they possibly can.

Mr Turnquest, meanwhile, said the cruise line investments being counted on to revive Grand Bahama’s economy “are still on” despite a global industry shutdown that has forced both Carnival and Royal Caribbean to raise billions of dollars in new capital to ensure they can survive the pandemic and emerge on the other side.

Carnival said it had committed to investing $200m in developing its private Grand Port in Freeport, while the Royal Caribbean/ITM joint venture signed to acquire the Grand Lucayan resort - and redevelop Freeport Harbour - in a $300m deal just days before the cruise sector was confined to port for what looks like being a duration of several months.

“As we understand it, today those projects are still on although admittedly delayed, and we just hope they come through and we come to the bottom of this economic challenge relatively quickly,” Mr Turnquest said.

One source familiar with the Grand Lucayan situation, speaking on condition of anonymity, said Royal Caribbean and Carnival would likely need a year after resuming cruising itineraries to make a move on their Grand Bahama projects.

“We’re hanging on by our finger nails, in my opinion, The Bahamas generally and the Government, as far as the hotel is concerned,” they said. “They [Royal Caribbean/ITM] won’t be ready to do that for 12 months at least. They won’t be making money for at least that period. They’re going to lose billions as a result of this pandemic.”

Mr Turnquest, however, voiced optimism that the Inter-American Development Bank’s (IDB) $170m in financing will eventually help transform The Bahamas into a renewable energy leader. He added that the planned solar roll-out across the Family Islands would help reduce energy costs both there and in New Providence as the latter will “not have to subsidise” those locations any longer.

“It’s a win-win all around,” the deputy prime minister said. “We’re making progress; a little slower than I would like, but we’re making progress. I think, at the end of the day, we will have a project that delivers value for the Bahamian people for years to come and we will become a leader in this technology for years to come.”