By Jerry Roker
for Bahamas Press
Bahamians need to understand our financial predicament. We are largely in a fiscal mess that was created almost totally by all governments that we’ve had to date, by their spending more money than we were taking in. Simple. Having said this, it in no way suggests or otherwise infer that for the most part, the monies were not spent wisely. To the contrary. Our education, telecommunication, water and sewerage and building plants are just a glimpse as to where some of this money went.
When you listen to those opposed to the government, our national debt got to where it is, all of it, between the period May 2012 to present.
By the very makeup of our economy, our dependence is on foreign visitors, substantially from the United States. in 2008 we were victims of the the worst economic meltdown the United States experienced since the Great Depression nearly 100 years ago. They are not fully out of the woods yet! Unlike the 1929 depression, the 2008 depression was fueled by a housing/mortgage crisis. And the economists tell us that such a depression takes a much longer period of time to fix.
At the moment, we are about two or three years away from balancing our budget, something we haven’t done in decades. This is indeed very significant, particularly because it will be accomplished without the loss of public service jobs. Yet PM Christie and his government get no credit.
The Bahamas needs foreign currency, foreign workers and foreign investment. Foreign investment and business provide us with foreign currency, jobs and revenue through taxes.
Whether one likes it or not, The Bahamas has survived and prospered for the past 50 years from this foreign investment. The Bahamas produces virtually nothing to obtain foreign currency.
This crucial foreign currency keeps us all alive by enabling Bahamians to buy almost everything we need to survive, from cars to wine to food to freezers.
We need foreign currency to survive. A foreign company sets up in The Bahamas; lets say they hire 20 foreigners and 20 Bahamians. Their international clients pay this foreign company for their services in foreign currency. To pay for their rent, electricity and expenses, they convert this foreign currency at a Bahamian bank into Bahamian dollars. Bahamian companies — eg, food wholesaler, car dealership, furniture shop — then convert, at the bank, their Bahamian dollars to this foreign currency, with which they are able to purchase goods overseas — upwards of 80 per cent of all goods in The Bahamas are imported — and sell these goods to the Bahamian population. Originally, all our foreign currency came from the tourism industry; now The Bahamas is almost totally reliant on international business for foreign currency. We pay interest on our national debt in foreign currency. Without foreign currency, The Bahamas cannot exist as we know it. The Bahamian dollar is worthless to the rest of the world.
The Bahamas needs foreign workers, so we can tax them and their employees.
We need a certain number of people to tax to keep the country economically stable, similar to a restaurant needing a certain number of customers to survive. On top of this, a large percentage of Bahamians will be reaching retirement age very soon — therefore our tax base will decline and the demand for pensions will increase. We need a growing work force just to survive, let alone prosper.
The Bahamas needs foreign business and investment to provide jobs for Bahamians. We need to welcome foreign businesses to set up in The Bahamas and to provide jobs for Bahamians. Until we have other pillars that create jobs in significant numbers, we have no other viable options.
As for the foreign workers, they rent a house or apartment from a Bahamian, buy clothes and groceries, eat at restaurants, send their children to schools and generally spend their earnings in The Bahamas. This spending provides numerous jobs for Bahamians. Bahamian businesses need a certain volume of customers to survive. Many businesses in The Bahamas need foreign customers to stay in business. The main reason that restaurants, shops, daycare centres and other businesses are shutting down is related directly to there not being enough patrons.
Foreign workers pay into our national insurance fund and provide more airline seats to The Bahamas. Once their time is up they leave and their NIB contributions strengthens the NIB Fund, because they rarely, if ever access benefits from the Fund. Foreign businesses provide volunteers and donate large amounts of money to local charities.
Whether the unions, the Government or Bahamians like it or not, The Bahamas is a service economy. Our economy survives by collecting foreign currency through tourism and international business. Our service industries are not only waiters, bartenders and chambermaids, but also include lawyers, accountants and bankers.
If The Bahamas has any possibility of surviving this national debt burden of more than $7 billion, Bahamians, permanent resident’s certificate and work permit holders, black and white, young and old, religious and atheist, heterosexual and gay, PLP and FNM will all need to work together to make The Bahamas a stable and extremely attractive environment for foreign business and investment.
Otherwise, our children and grandchildren will be enslaved by our huge national debt.