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By David Geraldo Frazer

In the 1960s, Germany experienced one of the world’s most impressive examples of economic growth and development that raised the standard of living for the Germans exponentially.  Its success was due to a number of factors, not least of which was its ability to organize its industries, plan for the future and engage stakeholders at all levels in the work of economic growth.  If one posed the question today where is the economy of The Bahamas headed in the next five to 25 years, it would be difficult to provide a viable answer partly because of the lack of direction in state policy.

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Budget

For the most part, Prime Minister Perry Christie has inherited a budget which perhaps was near completion, hence allowing you little room to make substantive policy changes save for some tweaking given the late stage of the process.

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In our reading we came across a letter to then President-elect Ronald Reagan from his Coordinating Committee on Economic Policy which we thought sheds some light on where we are as a country today some 30-plus years later.

We have up-dated the letter to reflect the issues and challenges facing The Bahamas and made some specific recommendations to our prime minister. The quotations herein include our modifications to that letter in our context.

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We have read with interest varying responses to leading international credit agency Moody’s warning to The Bahamas government on its proposed mortgage relief program.

Readers would recall in the column on the PLP’s plan to tackle the mortgage crisis, Pts 1 & 2 we at CFAL expressed our concern with the then Progressive Liberal Party (PLP) proposal, as we had difficulty understanding the feasibility of the plan. While we agreed with several of the recommendations, we also strongly disagreed with others. This is what makes a market. It is now the government’s program.

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First we again congratulate Prime Minister Perry Christie on the victory of his party at the polls last week.  As promised, he has appointed his full Cabinet of over 21 people and yesterday they got down to the business of managing “Bahamas Incorporated”.  

We expect the government to review some of the mandates and contracts signed in the last few months, as it seeks to execute its 100-day commitment to the Bahamian people.  There will be some who criticize the new government for some of its appointments and decisions.  However, we must be mindful that the Bahamian people gave Christie a mandate and they expect him and his team to execute and deliver.  We expect Christie and his team to surround themselves with competent and trustworthy individuals.  It’s no different than a new CEO taking over a company.  He brings with him people he has confidence in who also work well with him.

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On Monday, May 7th, The Bahamas held its eighth election; an event which is best described as perhaps the most pivotal election since independence. The manner in which it was conducted took the process to a new level. It also resulted in the changing of the guard and will no doubt usher in a new cadre of political leaders.

We wish to congratulate Perry G. Christie, the new prime minister of the Commonwealth of The Bahamas, on his election victory.

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In less than five days Bahamians will go to the polls to elect a new government to manage The Bahamas Incorporated for the next five years. Voting is a right we all enjoy in a democratic society and we encourage all to vote but please, only once.

All three major parties have issued documents articulating their visions or business plans for The Bahamas for the next several years. We invite all to review and where possible seek clarifications to some of the lists of promises being made.

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How much will the PLP's plan to tackle the mortgage 'crisis' cost the people of The Bahamas?

Total Bahamas domestic credit was approximately $7.103 billion at the end of February. Loans or mortgages with maturity over 10 years stood at $4.639 billion. Mortgages outstanding was $3.090 billion with total private sector loans in arrears of $1.159 billion. Total mortgage arrears stood at $619.6 million.

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At the center of the 2008 global crisis was the mortgage debacle. The U.S. government funded mortgage agencies that provided funding for residential mortgages, which in most cases, the mortgagee was not able to afford. The end results were foreclosures and a depressed housing market — now headed into its fifth year.

As we all know, in the absence of a holistic economic plan The Bahamas continues to depend on the success — or lack thereof — of the U.S. economy.  The Bahamas is now experiencing what the U.S. experienced back in 2008 in the mortgage market as a result of lenient lending practices. To fix the core of this problem we need policies that are realistic, achievable and measurable.

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The present system in The Bahamas, which employed persons contribute to, is a form of social security. Our health system includes tax-funded care through government hospitals and clinics, and private care funded by direct user fees or private insurers.  The incentives that exist include pension, invalidity assistance, medical incentives, maternity benefits, some income replacement, temporary and permanent disability benefits, and health coverage for occupational injuries.  Basically, social health insurance currently exists only through the industrial injury component of NIB.

Recently, the present government implemented the National Prescription Drug Plan to assist some Bahamian residents, particularly the elderly and children under the age of 18 years.  It is estimated that the cost of this program is currently running around $5 million; a figure which we expect to only increase in the future.

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CFAL, Third Floor, 308 East Bay Street, P.O.Box: CB 12407, Nassau, New Providence, The Bahamas. Tel: 242-502-7010

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