NASSAU, BAHAMAS — The government will likely be in “deficit-spending territory” for the next three years as it grapples with the economic fallout from the COVID-19 pandemic, a well-known banker has opined.
Gowon Bowe, the Fidelity Group’s chief executive, told Eyewitness News: “Ultimately, I don’t see a reduction in the deficit for three years. When we look ahead of us, we are going to have GDP being impaired. If we previously used to earn some 18 to 20 percent of GDP in revenues and GDP declines, the only way we get that same revenue base is by increasing taxes or growing the economy. Everyone is projecting that we won’t see any type of sustained recovery until 2022 going into 2023.”
He added: “We certainly are going to be into deficit-spending territory for this year and the next two years.”
Bowe warned that the government must strive to keep the fiscal deficit at a sustainable level.
“Going forward, we have to keep it at a sustainable level in terms of repayment because while we could borrow, if we get to a certain point the only thing our budget would be about going forward is paying debt as opposed to national priorities,” he said.
Bowe added: “We strongly need to look at a national development plan, set our priorities, allocate our resources to it and most importantly be meticulous in understanding the returns we are getting either through efficiency, reduced expenditure or increased revenues.”
The government will this month present the Fiscal Strategy Report to Parliament. That report will provide the macroeconomic and fiscal outlook which will guide the framework for the next budget.
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