Cooper responds to IMF: Economic situation challenging, but no reason for panic

The government must roll out a comprehensive program to drive economic activity that will generate US currency and stabilize inflows and outflows in order to protect the country’s balance of payments, the Progressive Liberal Party’s (PLP) Deputy Leader and Shadow Finance Minister Chester Cooper said in a statement yesterday, adding that a clear borrowing and debt management strategy needs to be revealed.

Cooper, whose statement was in response to the International Monetary Fund’s (IMF) recent Article IV mission to The Bahamas, said that mission painted a dire picture of the country’s financial situation, though he contended there is no reason to panic.

“Concerning is the damning assessment of the government’s financing strategy, or lack thereof, and debt management capabilities,” said Cooper.

“The IMF’s critical review is an opportunity for The Bahamas to respond with a disciplined program of prudent actions and innovation.

“This speaks to the need for constant coordination and alignment of policy objectives throughout ministries, with methods and tools to drive outcomes, which both stabilize and advance our economic life in these islands.”

Cooper said despite the country’s current economic situation, it can maintain a pathway to economic recovery with sound leadership.

“All things considered, while the overall economic situation is challenging and I see the stark reality in front of us, I see no reason for panic,” he said.

“When we consider our proximity to the United States and the movements of global forces, The Bahamas is nested in a zone positioned for economic recovery and expansion. The only thing hindering that is leadership.”

Cooper called for expedited digitization throughout government systems, a clear multi-year strategy and prudent fiscal targets.

While the IMF called for tax reform in the country, he said caution should be observed when tweaking that revenue segment.

“While I respect the IMF calling for consideration of major overhauls to our tax regime, I would caution this administration to tread carefully,” said Cooper.

“The last VAT increase was implemented without proper study and consultation and resulted in economic contraction and inflation. We have nothing to show for it but misery and failed fiscal targets.”

Cooper also went after the government’s recent foreign currency borrowing, contending that the government seems to be “seeking money from any source through any means no matter the implications”.

“The fact that $600 million in bonds due to mature in 12 years were priced at 8.95 percent six weeks ago and just this past week, $225 million in bonds were issued at 8.25 percent, speaks to the fact that the first tranche was overpriced,” he said.

“It also speaks to the lack of a clear borrowing strategy. In the six weeks since the original issuance, there has been no new favorable economic information, which could account for the reduction in the price of the bond.”

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source https://thenassauguardian.com/cooper-responds-to-imf-economic-situation-challenging-but-no-reason-for-panic/