“We have a position and a strategy that we believe are sustainable”
NASSAU, BAHAMAS — A top finance official said yesterday the country’s widening fiscal deficit is no reason for “alarm” as it is temporary and not structural, though he admitted it is cause for “caution and concern”.
Acting Financial Secretary Marlon Johnson, while addressing a post-budget press conference yesterday, said that prior to Hurricane Dorian and the COVID-19 crisis, the Minnis administration was moving towards a balanced budget and fiscal consolidation. He noted that governments around the world have run up significant deficits in their efforts to respond to the impact of the COVID-19 pandemic.
“Yes, it has meant that there is a substantial ramp-up in the deficits. The way that is sustained is through a plan,” said Johnson.
“What the government has done in a fiscal responsibility strategy, which was published last December, it laid out that we would have anticipated a deficit of $954 million and it came in at $951 million. The plans also say [the] next deficit will go down to around $300 million as the economy reflates.
“These are temporary and transitory and not structural. As the economy has opened up, our revenues have returned.
“Yes, it is reason for caution and concern, but not alarm. It would be reason for alarm if these were structural and long-term. Going into next year and the year after that, deficits will come down and we have a position and a strategy that we believe are sustainable.”
Prime Minister Dr Hubert Minnis tabled a resolution in the House of Assembly on Wednesday revealing the government’s intention to borrow $871,645,371 million in the 2021/2022 fiscal year.
Minnis also tabled a second resolution to borrow $115,247,319.15 for the mitigation and treatment of COVID-19; to support the Public Hospitals Authority’s modernization of the health system; and to incentivize medium and small businesses.
The government projects to take in $1.8 billion in proceeds from borrowing in the coming fiscal year.
Johnson explained that the $871 is new net borrowing. While the government projects to take in $1.8 billion in the coming fiscal year, Johnson noted that this includes rollover debt.
He also noted the government’s unfunded pension liabilities are factored into its fiscal strategy plans.
“There is no immediate concern there,” said Johnson when asked about the issue.
“We were delayed in completing a pension study. We have finally gotten all the data required from the agencies. I imagine that before the end of summer, we will be able to provide Cabinet with some recommendations on the pension issue going forward.”
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