By LEANDRA ROLLE
Tribune Staff reporter
lrolle@tribunemedia.net
A TOP financial expert believes a candid conversation needs to be had between the government and Bahamians about the country’s finances, noting there appears to be an unrealistic expectation of what the state can do about inflation.
Gowon Bowe, Fidelity Bank’s CEO, said while many expect the government to put in place policies to ease the high cost of living, there is little they can do to tackle the issue because of limited resources and other external factors.
He was contacted after the opposition called on the government to develop a strong and definitive plan to counter the effects of inflation and to execute a credible and robust fiscal and economic plan.
“Ultimately, I think that there is a false expectation or an unrealistic expectation of what the government can do in relation to inflation from The Bahamas’ context,” he told The Tribune
“We look at countries like the United States and some of the European countries and we hear about their governments taking certain actions in response to inflation, but the reality is they actually compose certain components of inflation.
“In The Bahamas, it is important for us to further understand some of the fundamentals. The first thing is we don’t produce what we consume so that means all that we’re consuming, we import and because we don’t produce things, we don’t control inflation.
“It means that the cost of food and the cost of textiles and the cost of fuel and oil price which we, for lack of a better word, import and inherit.”
Mr Bowe said because of this, options remain limited. He further gave a detailed explanation as to why.
He continued: “What we have to put into our context is does The Bahamas government and The Bahamas as a country have surpluses? And the answer is no. We have been running fiscal deficits since independence. No fiscal surpluses.
“Do we have significant headroom on the debt side? The answer of that is no because when GDP (Gross Domestic Product) had been reduced during COVID, we were in excess of 100 percent.
“We haven’t reduced the debt levels and the ratio has only improved because the productivity in the economy has picked up so GDP has grown. So, the reality is if government intervenes and says ‘ok we look at how we reduce the cost of items’, it really has very limited options and one of those options is to reduce taxation. But if it reduced taxation and we don’t have surplus reserves, then it is increasing the deficit which is increasing the burden on the Bahamian people in the future. So, we have to be careful about being shortsighted and saying, ‘help me now’ when I may put myself in a worse circumstance later.”
He also called for an end to “political pandering” and spoke of the need for all to come together to have a “candid” conversation on the country’s fiscal affairs.
“The truth of the matter is, let’s stop being emotional,” he said. “To be perfectly clear, let’s stop pandering to the political base and to the political narrative and let’s have a candid and transparent conversations with our citizens and say yes, we would wish to be in a better situation to where we could potentially take on more debt, potentially run a deficit or reduce the surplus in order to ease the burden, but we are not in a situation to do that.”
He urged Bahamians to conserve as much as possible and called for greater focus to be placed on struggling families dealing with inflation.
“We need to focus our attention directly to persons who are already on the margin, needed social assistance and now need it even more,” Mr Bowe added.
“So, this goes to the RISE programme that the government committed to implementing when they changed the VAT where they removed all breadbasket exemptions, etc, and said that we are going to basically make everyone pay the same thing and then redirect those surplus resources to those who do not have and they have been slow as a government to implement that programme and this inflation session is really where the need for that comes about.”