NASSAU, BAHAMAS — Deputy Prime Minister and Minister of Finance K Peter Turnquest yesterday contended the Minnis administration has increased Government debt by $977 million since taking office.
Turnquest said the sum represented the “net borrowing”, which comprises gross borrowing and total debt repayment for the first two full years in office.
“When you take the difference between gross borrowing and debt repayment, you get net borrowing, which is in fact the true and proper measure of Government borrowing,” he said.
“Furthermore, our net borrowing favourably compares to the Opposition, who increased Government Debt by $1.2 billion during their first two full years in Office. It only requires basic math to know that $1.2 billion is bigger than $977 million.
“In other words, the Opposition borrowed more money in its first two full years than this Administration has so far,” he added.
In Parliament yesterday, Turnquest said the government intends to return to its fiscal consolidation efforts over the medium term, adding “this budget year will be an anomaly”.
“We do intend to return to our fiscal consolidation efforts over the medium-term, as the Bahamian economy recovers,” Turnquest said.
“This new course will not simply be a pass, or an excuse to return to the old ways of fiscal mismanagement that reigned before we assumed Office. We remain committed to fiscal responsibility, and the continued transformation to sustainable fiscal management in The Bahamas.”
He said: “Of course, private sector growth is our ultimate solution to grow the economy, which will create sustainable public financial outcomes. It is our intention to come out of this pandemic with a strong recovery; with a tide that will raise all boats. However, we have to be honest and sober about our short-term growth prospects, and our historical growth trends.”
Turnquest noted projections for an unprecedented 12 percent decline in real GDP.
“The projections for fiscal year 2020/21 put total Government revenue at $1.7 billion,” he said.
“We are projecting a shortfall of $900 million compared to our annual projection for last year. Although concerning, given our performance just three months ago, the Government is not broke, and we caution against any fear mongering that relies on such claims. Faced with this scenario, we have put in place arrangements to ensure we can adequately meet our obligations, as any responsible Government would.”
Turnquest also noted that the government’s reform agenda for state owned enterprises is a major component of the Government’s planned return to fiscal consolidation.
“Every year, the Government spends over $400 million subsidizing State-Owned Agencies (or SOEs), many of which are inefficient and uncompetitive,” he continued.
“In some cases, there is either an overlap in mandates and responsibility; or the mandate has not been reviewed and updated in many years. The reform agenda for SOEs is a major component of the Government’s planned return to fiscal consolidation,” said Turnquest.
“Not only will this make SOEs more dynamic, efficient and self-sufficient, it will also reduce the amount of money the Government allocates to subsidize these entities.
He said: “To this end, we have targeted a $100 million annual reduction in subventions over the next four years, as these entities move to optimize efficiency and cost recovery strategies. SOEs will have to adopt new business practices; they will have to look at their fee structures; and they will have to explore opportunities to consolidate operations to better use public funds. sustaining employment, and it is about accelerating our Government reforms.”