DEBT: Borrowing to reach nearly $1 billion, with deficit nearing the same

DEBT: Borrowing to reach nearly $1 billion, with deficit nearing the same

Deficit projected at $951.8 million 

NASSAU, BAHAMAS — The projected deficit is foreshadowed to be $951.8 million in the 2021/2022 fiscal year, according to Prime Minister Dr Hubert Minnis, who revealed the government will seek approval to borrow nearly $1 billion to cover expenses left over in this fiscal period and cover the estimated deficit in the upcoming period, among other commitments.

Prime Minister Dr Hubert Minnis delivers the 2021/2022 budget communication in the House of Assembly on Wednesday, May 26, 2021. (FILE PHOTO)

During the budget communication in the House of Assembly, the prime minister tabled a resolution revealing the government’s intention to borrow $871,645,371 million in the 2021/2022 fiscal year.

He 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.

Government debt is estimated to balloon to $10.386.4 billion, 84.3 percent of GDP, by June 2022.

The prime minister noted that debt servicing charges have increased over $100 million year-over-year, with its revenue intake projected at $2.245 billion.

He also advised that the current budget anticipates some $100 million in direct COVID-19-related support in the form of food assistance, unemployment assistance and health sector support, as well as revenue foregone in the government’s employment incentive program.

“While we would have hoped that the impact of the coronavirus would have dissipated at a faster rate, we are faced with the reality of a more protracted pace for global recovery and particularly recovery of the global tourism industry,” Minnis said.

“Nevertheless, with signs pointing to a global rebound in fiscal year 2021/22, total government revenues are projected at $2.247 billion, representing an increase of $588.3 million or 35.5 percent over the projected fiscal year 2020/21 total revenue.

“Despite this improvement, revenues are projected to remain 7.5 percent below the $2.426 billion posted in FY2018/19, reflecting the fact that our economy will not likely return to full capacity during the upcoming fiscal year.”

The government has provided approximately $194.9 million in direct COVID-related support for the nine months ending March 2021.