NASSAU, BAHAMAS — Deputy Prime Minister and Minister of Finance K Peter Turnquest yesterday tabled notice of a resolution that will authorize him to raise $1.34 billion to defray expenditure.
According to the resolution, the sum can be raised through the creation and issuance of registered stock, loan agreements with banks, and the issuance and sale of bonds.
Turnquest said total revenues are expected to decline to roughly $2.1 billion, and expenditures estimated to rise to some $2.8 billion at the end of FY2019/20.
“I would note here that the Government is intent on focusing its debt management strategy over the medium term, to effect the best benefit to the citizens of The Bahamas,” Turnquest said.
“In this light, we are in the process of a debt conversion for a number of loan facilities that will allow us to lock-in fixed rates in a low interest rate environment. This should result in debt servicing savings even in the near term.
He continued: “Though it will not be easy, we can glean on the lessons from a number of our regional counterparts that it is better to address these issues sooner, rather than later. To restore the fiscal affairs of our country, this Administration will remain disciplined in its fiscal management over the medium to long term.
“To do this, we expect to run a deficit of some $1.3 billion, or 11.6 percent of GDP in the new fiscal year. The imperative of investing in a strategy like the Resilient Bahamas Plan, coupled with the associated revenue loss from subdued business activity will result in an unprecedented fiscal deficit.”
The government is projecting a deficit of some $770 million, or 6.4 percent of GDP for the current fiscal year.
“Compared with the Supplementary Budget estimate, this represents a widening in the deficit of some $96.0 million, or 1.1 percentage points in the GDP measure,” he said.
“Consequently, total Government debt is forecast at some $8.2 billion at end-June, or 67.9 percent of GDP, as compared to the estimated 64.4 percent at the time of the Supplementary Budget.”
Turnquest noted that the substantial impact of COVID-19 on the Bahamian economy has already generated reaction from the international market. Standard & Poor’s recently revised the country’s sovereign debt rating down one notch to BB last month.
“Although this was expected, it is a prime example of why we are developing a robust and strategic recovery plan, so as to mitigate against future downgrades, and the attendant negative elements that are attached to downgrades,” he said.