A “significant recovery” requires the return of 50 to 75% of tourism staff


• Ex-governor: COVID’s “stagnation” will last another year

• The government must “finance the cost of nothing” until 2021

• Bahamians in the Know: Get Ready for a Quiet Christmas

By NEIL HARTNELL

Editor-in-chief of the Tribune

[email protected]

The Bahamas’ “economic stagnation” will last for at least another 12 months, a former central bank governor warned yesterday, with recovery only coming when 50 to 75 percent of tourism workers are rehired.

Julian Francis, who held the post from 1997 to 2005, told Tribune Business the government had no choice but to take over COVID-19 from the private sector and “fund the cost of doing nothing “until 2021.

Acknowledging that the Bahamas is “a city on horseback” due to its dependence on tourism, Mr Francis said this made his options for quickly escaping the economic slump imposed by the pandemic “extremely limited”.

He added that the country’s model as a small open economy meant it would likely be among the most “severely affected” by the fallout from COVID-19 until the return of “a viable tourism business.”

With that target still a long way off and several large hotels delaying their returns beyond the October 15 date recommended by the Tourism Department, Francis said the Bahamas would struggle to find “outside solutions” to their economic dilemmas. because they have to compete. with multiple rivals in a similar “hopeless state”.

In revealing that a major resort had informed him that it still hoped to start its “acceleration” around Thanksgiving, the former governor of the Central Bank expressed optimism that the so-called “vacation in place” strategy “proposed by the Ministry of Tourism could generate at least some business for the hotel industry during the high winter season.

He warned, however, that Bahamians should plan for “a very quiet Christmas” in 2020 and aim to minimize spending / borrowing until the worst of COVID-19 subsides and there is “light in the tunnel. “- of a vaccine or other – at some point in 2021.

“I really believe the position the Bahamas is in; the opportunities to get out of this for countries like the Bahamas are extremely limited,” Francis told Tribune Business. “We’re almost sort of, and I wouldn’t quite say we are there or we are, but we are almost the most likely to be seriously affected by this problem of any country I can think of.

“We’re a very small open economy. We’re a bit of a one-horse town. If you take tourism away, we don’t have much, which is going to affect us. So until we can recover our tourism business in a significant way, that is, we can fire 50 to 75 percent of those people who work in the tourism industry, until we get there, we’re going to have a hard time.

“What holds us now, and what I think will really lift us for next year, is the extent to which the government can fund the cost of doing nothing ….. Conclusion: The government will have to fund this stagnation for the next 12 months. How much money is needed for that, I really don’t know, ”he continued.

“We have seen government spending on providing food to the population steadily increasing. This is what life in the Bahamas is like until we get back to a viable tourism business.”

Mr Francis, who now owns many interests in the private sector, said based on his conversations with international investors and lenders, there was “continuing interest” in the Bahamas, so the government should have no difficulty in borrowing and accessing short-term debt financing.

And, while commending the government for “setting in motion” efforts to change the Bahamian tourism dependent model through the Economic Recovery Committee (ERC), he argued that the development of new industries and of a diversified economy will be a medium to long term. a long-term goal that takes time.

“Let’s be frank with ourselves: this is going to take some time, especially when the rest of the world is facing the same challenges as us,” the former governor of the central bank told this newspaper.

“Whatever we can do now, we are in competition with all those who are trying to find a way to rebuild their economic model, and the rest of the world is in an equally dire situation. It’s not the kind of environment to look for on the outside. solutions. “

Mr Francis, who is chairman of BISX-listed Commonwealth Brewery, wrote in the company’s annual report that 2020 will likely be the toughest year for the Bahamian economy and its private sector in decades in due to COVID-19 lockdowns, restrictions and declining business activity.

“It is already evident that 2020 will be perhaps the most difficult year for the economy and its business and industrial sectors in many decades,” he said. “It is already evident that small open economies like the Bahamas, exposed as they are to global vibrations and lacking the facilities available to more developed countries, will be hardest hit by these developments.”

Speaking to that newspaper yesterday, Mr Francis said that while there were initial signs of tourism stirring, its recovery was not going to happen “overnight.” Current restrictions, especially the mandatory 14-day quarantine period for all visitors, remain a significant obstacle to its rebound.

“We have to wait and see how quickly the big hotel properties get back to business and grow,” he added. “I spoke to one of the big hotels a week ago and they were saying that we certainly hope, maybe around Thanksgiving, that we will start the process gradually, but it’s going to be slow.

“They have to experiment a bit with how they keep people safe and will have to implement measures to achieve that. It will not happen overnight. It will be a very slow process from where we are now to where we have. a significant amount of business recovered.

“I think it best translates between the middle of next year and the same time next year. It could be frustrated by any continuing or real resurgence of problems in the United States. We don’t know. what’s going to happen there when winter sets in. Again, this will be a slow process and will not provide a sufficient economic solution for the Bahamas. “

Still, Francis said the onset of American winter could still drive customers out of a market that supplies 82 percent of that country’s vacationers to the Bahamas provided they can do so in the ” bubble “proposed by the VIP – Vacation in Place of the Ministry of Tourism. – proposal.

Yet despite hopes for a rebound in tourism, the ex-central bank governor warned: “It will be a very quiet Christmas for most people. Bahamians, if they are smart, will not have plan to spend a lot of money. Don’t borrow nonsense money and keep the budget tight. We’ll get over that next year and see the light at the end of the tunnel. If we hold on to it. well, we’ll get there. “


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