Bahamas FightingDouble Impact on Economy
Wilting under the doubleimpact of a drop in tourist arrivals owing to the 11 Septemberterrorist attack in the US and property damage from HurricaneMichelle The Bahamas is reporting a bleak economic picture.
"The overall generaleconomic outlook is not very encouraging at this time. Economicgrowth in The Bahamas, which has been of the order of 5 percentper annum in recent years. and which was projected at 3.5 percentfor this year, can now be expected to be marginal," PrimeMinister Hubert Ingraham said last week.
Even in their country'sfight against the looming tough economic times Bahamians are beingtold that they must expect a further set back as money is to betaken from other resources and plunged into reviving the tourismsector.
The prime minister saidin a television broadcast that a US$80 million deficit is to beexpected owing to government expenditure on tourism promotionand installation of security systems aimed at making the travellerfeel safe in light of the overall sense of insecurity that sprangfrom the 11 September events in the country's main tourism market.
He said that money to bespent will exceed savings achieved on reductions in non-essentialexpenditure in the public sector.
Tourism on which this groupof islands is heavily dependent is apparently suffering more fromfallout of the acts of terrorism than damage dealt by the hurricane.
"Damage to the tourismsector resulting from Michelle, with few exceptions, was not majorand is not expected to significantly affect tourism or employmentin that sector," Mr Ingraham said.
Being spared the full wrathof the storm is something for which the tourism industry has morethan the usual reasons to be thankful for as the events of Septemberalone have the sector reeling. The prime minister indicated thathotel room rates which more than doubled over the past five yearsare expected to decrease as will hotel occupancy rates, jobs,wages and profitability.
""The dramaticdrop in tourist arrivals in September, and to a lesser extentin October, has led to shortened work weeks at all hotel properties,salary deductions for senior and mid-level management and administrativestaff at a number of resorts, and layoffs at three properties."
He listed the closure ofClub Eleuthera in Rock Sound, Eleuthera, which left 94 persons(including 30 temporary workers) without jobs; the temporary closureof Columbus Isles in San Salvador, which left another 140 Bahamianhotel workers (100 permanent and 40 temporary) without employment;and a reduction in occupancy levels and room revenues, which hasled to a further 150 Bahamians being laid off by Atlantis.
He referred to projectionsby economic analysts that the events of September will not producea long-lasting slowdown in the business of tourism, but for thetime that it lasts the effect will be severe.
"This is particularlyso as regards the travel and tourism sectors which most directlyimpact our own economic activity and which have now been furtherexacerbated by Hurricane Michelle which struck New Providence,the site of more than 70 percent of our hotel rooms and principaltourism infrastructure," he said.
Although its effect is notas telling as that stemming from the American disaster, HurricaneMichelle did hit hard enough to further put the brakes on an alreadyslowing economy.
"Significant implicationsfor employment are attached to the slow-down," the primeminister said.
He said that the impactof Hurricane Michelle is expected to have some effect on budgetaryallocations in the short-term, as already limited funds are reallocatedto meet the cost of restoring vital services to all citizens.
Additionally there is tobe unbudgeted expenditure to repair damaged schools, clinics andother government facilities and infrastructure, including coastalroads, docks and seawalls, which require immediate attention.
In a rallying call PrimeMinister Hubert Ingraham appealed to the fighting spirit thathas taken the Bahamas to the position of a leading Caribbean stateeconomically.
"The negative fiscalposition in 2001/2002 does not and must not act, or be seen asa forerunner for future years," he said. "We have workedhard to return The Bahamas to fiscal balance and, except underextraordinary times such as those we are now experiencing, TheBahamas ought to, in the future, be able to maintain fiscal balance.Even in these exceptional circumstances, our commitment to fiscaldiscipline is paramount."
Hurricane Michelle alsoproved to be taxing on the insurance industry from which thereare preliminary estimates of payouts to businesses and home ownersranging from $120 to $150 million.
"I am also advisedthat following upon the terrorist attacks in the United Statesand the damage caused by Hurricane Michelle, insurance premiumsfor property in The Bahamas are likely to be substantially increased,"he said.
The prime minister alsohit on the need to reduce the country's dependency on tourism,a topic that becomes popular Caribbean-wide whenever the industryis hard hit.
"Recession, or a dropin tourism invariably raises the question of economic diversificationin our country - a cry far less often heard in buoyant times whendiversification is less energetically promoted," he said.