by Rick Lowe

Well, an IMF team was here from December 7 – 13, 2016 and have released their report.

This sentence sums it up:

“Further fiscal consolidation, including more determined efforts to rationalize spending, remains critical for rebuilding fiscal and external buffers. To support stronger growth and job creation, policies should focus on implementing structural reforms to improve productivity and competitiveness…”

So what the heck do we do about it?

First of all the Government needs to hold the line on spending and growing its burdensome bureaucracy.

As Dr. Dan Mitchell points out from a working paper by two OECD economists, that:

“This paper investigates empirically the effect of the size and the composition of public spending on long-term growth… The main findings that emerge from the analysis are… Larger governments are associated with lower long-term growth. Larger governments also slowdown the catch-up to the productivity frontier.”

Dr. Mithell also points out that the paper also looks at the composition of government spending.

The Nassau Institute has pointed to excessive government spending as a major problem, exacerbating the country’s deficits and debt decades ago. See here… and here…

Find out more from Dr. Mitchell here…

The political class keep assuring the country with just a little more spending and higher taxes all will be well, yet, the evidence is clear that The Bahamas is on the wrong fiscal track, and finally even the IMF is agreeing with the Nassau Institute.

The fact that the Nassau Institute has been correct all along provides no solace however.