CFAL: Economy in need of an aggressive reboot

In the face of ballooning government debt and an uncertain economic recovery in the midst of the COVID-19 pandemic, the government and private sector must band together to create an ambitious and visionary long-term strategy to build back The Bahamas’ finances, financial services company Colina Financial Advisors Ltd. (CFAL) stated in its Local Economic Review for the second quarter of 2021.

The report explained that with a direct debt to gross domestic product (GDP) at 92.3 percent as of March 31, compared to 61.8 year-on-year, and the national debt to GDP, inclusive of contingent liabilities, at 96.4 percent, there is a need to aggressively devise an economic strategy to “reboot the Bahamian economy”.

The CFAL review contended that meaningful public infrastructure expenditure and a turbocharging of the domestic and foreign investment component of the economy are needed to aid in the recovery of the economy.

“The reality is that the lack of productive investments has had and will continue to have major economic consequences on the country’s economic growth,” CFAL’s report states.

“Consumption is down significantly due to stalled economic activity and relatively high unemployment levels, maxed out government expenditures and significantly reduced net exports. Thus, productive investments in healthcare, education, transportation, telecommunications, energy, housing and roads are key to leading The Bahamas out of this economic slump.

“Investment in such infrastructural projects coupled with innovation will provide The Bahamas with the high-quality jobs and opportunities necessary to drive economic growth and development.”

The report stated while the government has allocated only $372.4 million to capital expenditure this fiscal year, down from $515.5 million in the last budget year, it is yet to be seen whether that money will be invested in “productive capital projects in key areas of the society and not mere cosmetic upgrades”.

The report added that family island development and growth must be key components of the economic growth strategy.

CFAL’s review rehashed the critical need to create a competitive environment to start and grow a business and to improve the country’s ease of doing business index score.

“The Bahamas ranked 119 out of 190 countries in 2020, which is exactly equal to the country’s average ranking over the past five years, with no overall improvements in the components that make doing business in the country easier,” the report notes.

“While slight progress was made in the areas of starting a business, transparency in getting electricity, protecting minority investors and paying taxes, significant improvements are needed in other key areas such as dealing with construction permits, particularly the number of days for an approval, registering property, getting credit or financing for small and medium-sized business startups and improving the process for cross-border trading.

“These improvements are vital to improve the country’s overall scores and ranking and by extension the level of productivity and economic success. Policy initiatives to improve these areas must not be New Providence-centric but also inclusive of the Family Islands.”

Another critical component of growth for the country remains investment in high-quality skills and training, according to the report. CFAL suggests a subsidized apprentice program that provides youth at risk of long-term unemployment an opportunity to obtain the skills and experience that employers require.

“A successful skills development program will not only provide job opportunities for the young, but it will also simultaneously contribute to economic growth and productivity and help to make the country more competitive.”

The post CFAL: Economy in need of an aggressive reboot appeared first on The Nassau Guardian.

source https://thenassauguardian.com/cfal-economy-in-need-of-an-aggressive-reboot/