NASSAU, BAHAMAS – The government has received $9.4 million in cash donations and another $2.8 million in kind following Hurricane Dorian, Deputy Prime Minister and Minister of Finance revealed in Parliament yesterday.
Turnquest noted that the amount of donations received are far less than what the public perceives, during his contribution to the supplementary budget debate.
“Many of the public pledges that have been reported are actually in-kind and not yet received, and many of them are actually donations to private sector organizations and not the Government.
According to data from the National Emergency Management Agency (NEMA), which receives donations on behalf of the Government, as at January 31, 2020, approximately $9.4 million was received as actual cash donations, and another $2.8 million in kind.
“While this is certainly appreciated and has helped to cover costs associated with the acquisition of Recreational Vehicles (RV) for volunteers and staff that are on the ground working in Abaco and Grand Bahama, as well as with the temporary dome structures that are currently being erected in Spring City, Abaco, it simply is not enough to cover the greater cost of recovery of Hurricane Dorian,” he said.
“When you compare $9 million in donated funding to cover over $400 million in Dorian expenses and revenue losses, it is plain to see that our own resources are not enough for this massive response.”
Turnquest said that faced with this reality, the Government decided that it will not impose additional tax burdens on Bahamians to cover the cost of recovery.
“More taxes could slow down the already strained economy as people would consume less given the need to pay more in taxes. Although we have a large budget gap to close in the immediate term, this is not a viable option. Therefore, the Government will not be increasing taxes, or introducing any new taxes, to cover the cost of Hurricane Dorian.”
As to the options available to the government, Turnquest said: “We could slash spending by a few hundred million, but that means starving the economy of job opportunities and commercial activities by way of reduced capital and other major projects.
“Large spending cuts would also reduce the resources available to assist the vulnerable with social assistance benefits and other recurrent programs. To balance the budget in one swoop, we would have to cut total expenditure, across the board, by over 20 percent, based on spending estimates at the time of the National Budget.”
Turnquest said: “Indiscriminate cuts like this would affect everyone, and not just in the storm affected islands. This is not an option. The operations of the Government must continue to function. Again, the government realized that an economy of our size facing a $3 billion hit would be further impacted negatively by massive cutbacks in public expenditure.” Mr Turnquest argued that the only way to finance the “extraordinary” post-Hurricane Dorian expenses “without breaking the backs of taxpayers, starving the economy of opportunity and draining the Government of already tight resources” is to borrow. Still, he noted that this would be done in a way that is consistent with an articulated plan to bring the budget back in line over the medium term.
“Yes, we have considered that this will raise Government debt over the medium term. However, as you can see from the Fiscal Adjustment Plan laid out in our 2019 Fiscal Strategy Report, we have cautiously considered how best to manage the debt over the next five years, in an effort to reduce the debt ratio to no more than 50 percent of GDP over the next ten years, as prescribed by the Fiscal Responsibility Act, 2018.
“Yes, we are departing temporarily from our original fiscal consolidation plan; however, given the options either to raise taxes higher or to cut spending drastically, the government took what we know to be the prudent decision to raise the necessary resources through increased borrowing – and to focus this borrowing largely to fix the infrastructure and to provide direct support for persons most impacted by Dorian.”