Bahamas Government adjusting economically to COVID-19 spread

K. PETER TURNQUEST, DPM, Minister of Finance

The Government of The Bahamas is preparing a short and long-term plan in the face of the economic downfall as COVID-19 continues to place a choke hold on economies worldwide, said Deputy Prime Minister K. Peter Turnquest last week.

He added that the government will continue adjust as circumstances change and will overtime, speak to the medium and longer-term plans within the budget exercise and beyond. 

Turnquest, who was making a presentation in the House of Assembly on Wednesday, March 18, as to how the government will finance its COVID-19 response said that the government is up against substantial fiscal limitations, given its ongoing fiscal consolidation and the additional appropriations that were required for the equally pressing and urgent restoration activities in Grand Bahama and Abaco after Hurricane Dorian.

“Over the next four months, we expect the new fiscal demands associated with COVID-19 to exert additional pressure on our anticipated deficit numbers, and we expect the impact will linger into the new fiscal year,” he said. 

Turnquest noted that while the extent of the impact of the COVID-19 on the Bahamian economy is still unfolding, the plan is to first utilize existing contingency reserves and to reprioritize expenditure to remain within the limits of the recently revised borrowing envelope for the current fiscal year. 

The DPM furthered that should it become necessary, the government could consider, among its funding support options, accessing the International Monetary Fund’s Nonconditional Rapid Credit Facility, with current eligibility placed at a maximum of $200 million.  “Simply put, we have no plans to request additional borrowings at this time, as we are diligently managing the country’s debt levels. We will update these projections based on our ongoing monitoring and reassessment of needs,” he said. 

DPM Turnquest expressed that it is important, that members (of Parliament) appreciate that even if the threat subsides over the next three to four months and tourism sector begins to rebound, it is likely that such a rebound will be slow and measured. 

“Thus, it is important to highlight that our upcoming budget must be informed by a reality that the government will likely need to continue to use fiscal measures to boost investment and consumption and mitigate against a contracting economy,” he said. 

Accordingly, he affirmed that while the government remained tethered its commitment to fiscal and budgetary responsibility, they will revisit their fiscal targets within the context of the fiscal responsibility legislation, to determine the need for ongoing flexibility.  

“Therefore, the government will be able to adequately and responsibly respond to the emerging social, investment and other private support needs to minimize the negative impact on Bahamians and the broader economy,” Turnquest said.

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