National debt to increase to $8.2 billion
NASSAU, BAHAMAS – Deputy Prime Minister and Minister of Finance Peter Turnquest has tabled resolutions in the House of Assembly to borrow $587.9 million to finance Hurricane Dorian recovery efforts and cover revenue losses.
On Wednesday, Turnquest delivered a break-down of Dorian related expenditure as he tabled a supplementary budget and a resolution to borrow $507.9 million from a number of potential facilities like local banks and the Inter-American Development Bank (IDB).
He also tabled another resolution to borrow $50 million from the Caribbean Development Bank.
Turnquest confirmed the Government has decided against introducing additional taxes given the substantial impact of Dorian to the Bahamian economy and the need to maintain private consumption levels.
“Accordingly—and very conscientiously—the government has decided to fund the revenue loss and expenditure requirements through additional borrowings.
“Thus, I am also tabling a new borrowing resolution for authorization to borrow beyond the $72.4 million – which excludes the $628 million for refinancing of maturing debt- approved at the time of the 2019/20 budget communication in May of 2019,” he said.
Government debt is expected to increase to $8.2 billion by the end of fiscal year 2019/2020, up from $7.612 billion.
The Finance minister explained recurrent expenses are projected to be higher by $157.6 million, bringing the revised estimates to $2,687.6 million.
“Of this total, approximately $82.7 million is associated with Hurricane Dorian, which include: $23.1 million in costs associated with clean-up activities, $12.9 million to facilitate food and accommodation assistance programmes, $11.4 million to fund the extension of the unemployment benefit to eligible persons, $11.1 million in allowances for affected public staff, $5.4 million for the acquisition of supplies and materials, a $1.5 million allocation to the new Ministry of Disaster Preparedness, Management and Reconstruction, and, the remaining $17.3 million allocated to primarily cover contingencies, consultancy services, security and other costs,” he said.
On the capital side, Turnquest said spending is estimated to grow by some $150.5 million to a revised $385.5 million, with $100 million being directly related to hurricane restoration.
“Given the revenue loss and expenditure increases the Government expects to incur, the fiscal deficit FY2019/20 is now expected to increase by approximately $677.5 million, to 5.3 percent of GDP.
“This exceeds the approved budget target of $137 million, and therefore has corresponding implications for the financing envelope.”