NASSAU, BAHAMAS — The country’s fiscal deficit widened by a whopping 279 percent between July and December of last year, according to data released by the Ministry of Finance.
According to the combined first six months’ fiscal snapshot and report for July to December released by the Ministry of Finance last night, provisional data on the central government’s operations for the first six months of fiscal year 2020/21 indicate a significant widening in the fiscal deficit, to $736.1 million from $194 million in the same period of the prior fiscal year.
“This outcome is largely attributed to the economic impact of the global pandemic and the necessary health and safety measures, and social assistance programs, implemented to save lives and contain the fallout,” the report noted.
“The overall result was a significant reduction in revenue and increase in expenditure.”
As of September of 2020, the national debt stood at $9.3 billion.
The report further noted: “Compensation of employees was lower at $342.3 million.
“Expenditures for the acquisition of goods and services increased by $30.3 million (12.8 percent) to $267.1 million, driven by an increase in finance charges to $50 million.
“Subsidies to public corporations rose by $21.5 million to $219.3 million, which included transfers of $117.1 million to the Public Hospitals Authority (PHA), $34.8 million to Bahamasair, $19 million to the National Health Insurance (NHI) and $15.2 million to the Water and Sewerage Corporation (WSC) to support COVID-19 remediation costs and operational costs, amid revenue challenges imposed by the impact of the COVID-19 economic disruptions.”
The Ministry of Finance noted that COVID-19 social assistance alone accounted for a 10.1 percent increase ($119.5 million) in recurrent expenditure, while reductions in capital transfers of $17.5 million tempered capital outlays by 6.3 percent ($7.4 million).
According to the fiscal report, social assistance benefits — in cash or in kind — expanded significantly, by $91.6 million to $104.4 million — being driven by COVID-19-related hikes in outlays for unemployment assistance ($66.2 million) and food assistance programs ($30.8 million).
The report further noted that approximately $66.2 million was expended on direct cash transfers under the government’s unemployment assistance programme administered by the National Insurance Board (NIB).
Food assistance benefits, which were facilitated via the Department of Social Services and the National Food Distribution Task Force, totaled $30.8 million.
Minister of State for Finance Kwasi Thompson said in a statement: “Not only is the government continuing to execute its Resilient Bahamas budget plan for the current fiscal year, but we have also adopted a new medium-term roadmap and fiscal strategy to address the macroeconomic conditions we are seeing play out.
“This means we are taking care of our people by continuing our dynamic COVID-19 response. We are making short-term fiscal adjustments like reducing expenditures by an additional $200 million in the current fiscal year.
“We are laser-focused on the economic recovery, which means investing in small business and accelerating structural reforms.
“We are optimizing the government’s debt management framework and being vigilant and proactive in monitoring and responding to the ever-changing market conditions.”
