13.6 Percent is still obscenely high regardless of who we are or are not being compared with.
And Mr. Smith seems to have a crystal ball, I didn't realize that the PLP was going to leave the VAT funds just sitting there to absorbed by the debt.......didn't realize we were projecting a surplus.....Last I heard the PLP was earmarking the revenue for projects and spending increases....not targeting fiscal consolidation and debt reduction.
Besides for us to really get anywhere near long term debt reduction we need productivity and savings growth to push a divergence between the interest rate charged on our debt (determined by domestic credit risk and savings deposit competition) and the rate of growth (determined by the sophistication of our economy). Replacing capacity in terms of hotel rooms may bring us to the pre-crisis level, but it is unlikely given the new capacity that has come online in neighboring jurisdictions, will leave us in the pre-crisis competitive situation.
Or did the fact that Jamaica adding room capacity and Cuba liberalizing not arrive at the former ministers desk?
Not going to need a massive amount of rethink here, the solutions are pretty obvious.
Waste-to-energy, which adds additional base-load supply to NP, gives the ability to reclaim the eland use for the landfill, and a lower cost electricity supply for the bio-diesel production side. Moreover, the government can legislate based on the current and projected size of the domestic bio-diesel sector a percentage requirement at gas stations, this is the role of regulation to improve market conditions and reduce externalities.
We cannot just adopt the dollar, like Panama, that country had sufficient dollar inflows that aren't like the Bahamas tied to high volatility while also running multiple period substantial current account surpluses as well as having the support of FDI infows to justify a dollar substitution regime. The Bahamas is running a double deficit, current and primary account. We would have to either accumulate dramatic private dollar savings or run current or primary account surplus for a long period of time before being in a financial position to support that sort of regime since we wouldn't have the Federal reserve to inject liquidity into our domestic banking system if there was an economic down turn. Idealistically, yes dollarization would be great as it would lower transaction costs but we don't have the Fed to back us up in case of bank runs, or anything sort of monetary policy insurance, and have to run a very tight fiscal ship with no room for negative economic shocks.
If you can see the Bahamas running either private savings above the current 13%, near 40-50% or public savings through a series of primary account surpluses, or a positive balance of payments....then yes. But that's not our reality.
The peg is a good constraint on our government to be fiscally responsible, We do not have the economic base to support a floating regime, or the savings for full dollarization. The peg is currently the best fit and it only serves the Bahamian tax payer the faster the government gets to grip with the underlining macroeconomics of being a pegged economy and begins pushing for long term policies to get our exports and mid size firms up and running it will be good.
The sudden shock of a devaluation is never desirable for economic policy setting.
Kafkaexpert says...
13.6 Percent is still obscenely high regardless of who we are or are not being compared with.
And Mr. Smith seems to have a crystal ball, I didn't realize that the PLP was going to leave the VAT funds just sitting there to absorbed by the debt.......didn't realize we were projecting a surplus.....Last I heard the PLP was earmarking the revenue for projects and spending increases....not targeting fiscal consolidation and debt reduction.
Besides for us to really get anywhere near long term debt reduction we need productivity and savings growth to push a divergence between the interest rate charged on our debt (determined by domestic credit risk and savings deposit competition) and the rate of growth (determined by the sophistication of our economy). Replacing capacity in terms of hotel rooms may bring us to the pre-crisis level, but it is unlikely given the new capacity that has come online in neighboring jurisdictions, will leave us in the pre-crisis competitive situation.
Or did the fact that Jamaica adding room capacity and Cuba liberalizing not arrive at the former ministers desk?
On Ex-finance minister slams ‘misplaced’ Moody’s report
Posted 28 April 2015, 7:18 a.m. Suggest removal
Kafkaexpert says...
Not going to need a massive amount of rethink here, the solutions are pretty obvious.
Waste-to-energy, which adds additional base-load supply to NP, gives the ability to reclaim the eland use for the landfill, and a lower cost electricity supply for the bio-diesel production side. Moreover, the government can legislate based on the current and projected size of the domestic bio-diesel sector a percentage requirement at gas stations, this is the role of regulation to improve market conditions and reduce externalities.
On Bahamas Waste eyes ‘all options’ for loss making recyclings
Posted 28 April 2015, 6:54 a.m. Suggest removal
Kafkaexpert says...
Waste-to-energy, call it a day.
On Landfill ‘fire stop’ investments would eliminate NHI need
Posted 28 April 2015, 6:48 a.m. Suggest removal
Kafkaexpert says...
We cannot just adopt the dollar, like Panama, that country had sufficient dollar inflows that aren't like the Bahamas tied to high volatility while also running multiple period substantial current account surpluses as well as having the support of FDI infows to justify a dollar substitution regime. The Bahamas is running a double deficit, current and primary account. We would have to either accumulate dramatic private dollar savings or run current or primary account surplus for a long period of time before being in a financial position to support that sort of regime since we wouldn't have the Federal reserve to inject liquidity into our domestic banking system if there was an economic down turn. Idealistically, yes dollarization would be great as it would lower transaction costs but we don't have the Fed to back us up in case of bank runs, or anything sort of monetary policy insurance, and have to run a very tight fiscal ship with no room for negative economic shocks.
If you can see the Bahamas running either private savings above the current 13%, near 40-50% or public savings through a series of primary account surpluses, or a positive balance of payments....then yes. But that's not our reality.
The peg is a good constraint on our government to be fiscally responsible, We do not have the economic base to support a floating regime, or the savings for full dollarization. The peg is currently the best fit and it only serves the Bahamian tax payer the faster the government gets to grip with the underlining macroeconomics of being a pegged economy and begins pushing for long term policies to get our exports and mid size firms up and running it will be good.
The sudden shock of a devaluation is never desirable for economic policy setting.
On ‘No compelling rationale’ for exchange control end
Posted 6 March 2015, 6:05 p.m. Suggest removal