DPM: Government hasn’t ‘backed away’ from fiscal consolidation goal

DPM: Government hasn’t ‘backed away’ from fiscal consolidation goal
Deputy Prime Minister and Minister of Finance K Peter Turnquest

NASSAU, BAHAMAS — Deputy Prime Minister and Minister of Finance K Peter Turnquest yesterday said the government has adjusted its fiscal consolidation timeline but has “not backed away from it”.

Speaking with reporters ahead of a Cabinet meeting yesterday, Turnquest said that government remains committed to fiscal consolidation.

“We have put forth an adjusted plan and we will have the fiscal responsibility strategy report which we will lay next month that will speak to it in more detail,” he said.

“We have adjusted our timelines for fiscal condition but we have not backed away from our commitment to that.”

Turnquest said the Minnis administration remains committed to moving towards a “balanced budget.”

With the fall-out from the COVID-19 pandemic coming on the heels of Hurricane Dorian’s devastation on Abaco and Grand Bahama, the government has committed to significant borrowing to help cover its $1.3 billion budget deficit.

The Ministry of Finance confirmed on Monday that the government had been able to secure US$600 million in bond financing from international capital markets to help finance its 2020/2021 budgetary needs and repay debt.

The interest coupon of 8.95 percent was attached to the $600 million issue.

In a statement yesterday, Turnquest said: “The public can have confidence in the Government’s prudent management of the country’s debt portfolio, and its transformative plans to establish a new Debt Management Unit and legislative framework.”

“Bahamian governments have a long-standing track record of engaging top tier investors and multilateral institutions for which we are shareholding members. Successive governments have been guided by the expertise of the Ministry of Finance, the Central Bank of The Bahamas, and a number of other credible investment experts.

“The Ministry of Finance receives 15 – 20 offers every year, especially around post-budget time, offering very low-interest rates to total debt forgiveness. These offers are considered when the investors have track records and sufficient background information on which to do due diligence,” said Turnquest.

He added: “Transparency is required regarding the sources of funding and proposed financing structures. Unfortunately, many offers are from middlemen with no money themselves. Despite advertised low-interest rates, often times their extraordinary upfront administrative and arrangement fees are not disclosed transparently and negate any rate savings they potentially bring.

“While market forces ultimately dictate interest rates, the Government always seeks the most favorable financing arrangements and manages its debt portfolio in a responsible manner to minimize investment risks that might call into question the country’s fiscal integrity.”

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