“We cannot become a nation for sale”

• Leading real estate agent fears forced sale of public assets

• The former minister supports a “maximizing” balance sheet

• The government must “think outside the box” to fight the crisis

By NEIL HARTNELL

Editor-in-chief of the Tribune

nhartnell@tribunemedia.net

A prominent real estate agent yesterday expressed fears that the Bahamas could become a “nation for sale” unless they quickly get their $ 10.4 billion national debt under control and the associated economic and fiscal crises under control. .

Mario Carey, who also exited the real estate business through his Mario Carey Ventures (MCV) initiative, told Tribune Business that this nation may be forced to sell key national assets and heritage unless it quickly reckons with a growing mountain of debt that is currently larger than the economy of The Bahamas.

Speaking after this newspaper revealed that the country’s debt-to-GDP ratio stood at 100.4% at the end of June 2021, he acknowledged that the Bahamas are now in “uncharted territory” when it comes to liabilities sovereigns who now exceed their total economic output.

“It is worrying. It must be concerning, it must be, ”Mr. Carey said of data confirmed by the Central Bank of the Bahamas’ second quarter 2021 economic review. “I just hope we don’t get to the point where we become a nation for sale with a clearance sale of national assets.

“We are sort of entering new territory. Before, we had debt that was manageable, and if we continue like this, what will the ripple effects be? He added that if the Bahamas didn’t change course and maintain persistent annual budget deficits, the result could ultimately be a devaluation of the Bahamian dollar “and we don’t want it.”

While the term “nation for sale” first appeared in reference to the Bahamas during the decades of the drug boom of the 1970s and 1980s, in this context Mr. and the taxpayers to pay down the national debt if the deficits fiscal policies maintain their current trajectory and that all other policy options fail.

Some of the national assets / heritage that could be offered for sale include Crown land, Treasury land and other real estate assets including government owned buildings. State-owned enterprises, such as Bahamas Power & Light (BPL), Bahamasair, and Water & Sewerage Corporation, could also be auctioned off, although the price they would fetch is unlikely to be high.

While some may deem such a scenario unlikely, there is no doubt that the Bahamas is currently heading in this direction unless the Prime Minister and his administration change course. Asset sales are a hallmark of the International Monetary Fund’s (IMF) adjustment programs, and Alfred Sears, Minister of Public Works and Utilities, admitted during the election campaign that this is where the Bahamas is lead without drastic action.

Under the supervision of the IMF, these assets are often sold at discount prices through privatizations which are not always in the interest of a country. The Bahamas would likely earn higher prices through selective asset divestitures made at their own pace and under government control.

And Mr. Carey isn’t the only person suggesting the Bahamas go down this route. James Smith, former finance minister and former central bank governor, suggested yesterday that the government often focused only on the income side of its financial ledger and too often ignored its balance sheet.

But, rather than just selling Crown or Treasury land, he suggested the government partner with investors to develop selected areas. Mr Smith explained that the land would represent the government’s participation in such projects and that, through such public-private partnerships (PPP), it could generate income both to repay the national debt and to contribute to a fund. sovereign for the benefit of future Bahamian generations.

No assessment of the extent of Crown land holdings and the government’s treasury has been made public, but Mr Smith said: “Because the government has a [accounting] As a cash-only system, the government sometimes – or most of the time – ignores the assets it owns.

“When a household is going through difficult times and needs additional income, you either get a loan from someone willing to give it to you, a gift from someone willing to give it to you, or you make a choice regarding the assets you own. that you must liquidate to close the spending gap. They should really consider doing this sort of thing.

Noting that the government “owns a lot of real estate in the family’s islands that is ripe for development,” Mr Smith said he should target selected areas that could be developed in partnership with Bahamian developers and / or foreigners.

“Suppose a developer wants to make condos on a family island where the government has a lot of land. The government is investing the land in development and securing a source of income to help pay down debt and benefit future generations of Bahamians, ”he told Tribune Business.

“Basically, you say, look, we’ve already pretty much exhausted the traditional way of dealing with this, like borrowing and raising taxes, and we’re really in a hole with a 100% debt-to-GDP ratio, which is a crisis. Region. The traditional form of dealing with public debt, borrowing, borrowing, borrowing, you come to the end of this road.

“I say, ‘Think outside the box for a while and look at how to effectively maximize the return on your capital assets.’ Look at all the areas within government where they provide services that can be delivered more effectively by the private sector.

When asked what services he suggests outsourcing to the private sector, Smith replied that issues of health, education, national security and foreign affairs need to be addressed by governments. Much of the rest, he added, could be done by the private sector.

“What I’m saying here is that you are coming to the end of the road with traditional borrowing strategies to cover debt. We have to step back, like a home where a job has been lost, and say we have to move to a much cheaper place or sell a new car, ”he said.

“The government is approaching it given the increase in debt, where it will be very difficult to finance it without the necessary economic growth. We are digging ourselves from a very deep hole, and the pandemic is responsible for a large part of it. “