Country facing financial hardships due to Dorian, COVID-19, says DPM

DEPUTY PRIME MINISTER K. PETER TURNQUEST, Minister of Finance

“It is incumbent that the country remains steadfast in completely reopening the economy swiftly, but more importantly, as safely as possible.”

So, said Deputy Prime Minister K. Peter Turnquest, Minister of Finance as he disclosed the financial hardships the country has faced, firstly with the devastation as a result of Hurricane Dorian, and now coupled with the COVID-19 crisis.

“The Minnis-Administration presented a pragmatic budget in June 2020 that anticipated a year of economic hardship, driven by significant shortfalls in government revenue, subdued economic activity and high levels of unemployment because of the ongoing COVID-19 crisis.

“Today, we are all living the realities of this public health emergency and experiencing the socioeconomic fall-out foreshadowed in the budget,” said the finance minister.

He noted that in response to the crisis, the government continues to implement its fiscal and economic plan to manage the ongoing crisis, mitigate further economic fall-out, stimulate economic consumption, and prepare for a reopening.

“The budget was predicated on a base case scenario, which anticipated muted economic activity in tourism for the first quarter of the fiscal year – July to September 2020. However, the necessary but protracted shutdown in August had a significant impact on the business community, and, has caused some deviation to our initial revenue forecasts for that month. Further, a failure to jump start tourism before the end of the year, would likely result in a more troublesome scenario,” said Turnquest.

Fortunately, he added, the Minister of Tourism (Dionisio D’Aguilar) in his update on Monday, September 7 showed evidence of the significant pent up demand for travel to The Bahamas.

“We have reason to anticipate a successful winter season, provided that our efforts to safely reopen continue,” said the DPM.

He noted that while the partial and complete lockdowns as well as the curfews implanted have been effective in the COVID-19 fight, ultimately saving lives, the restrictions undoubtedly impacted revenue receipts for the nation, based on performance indicators for July and August.

“For the first two months of the fiscal year, total revenue came in at approximately 77 percent of the budget projection for the related period, largely reflecting the slowdown in economic activity in August, as a result of the lockdown.

“As for expenditure, since June, we have seen the expected ramp up in spending related to unemployment support, food assistance and other forms of emergency relief, in line with budget expectations. The first two months of the current fiscal year also show that expenditure was slightly higher than anticipated.

“As a country, we cannot readily afford more protracted lockdowns without significant and painful adjustments to the government’s fiscal plan. We join all Bahamians in our desire to see businesses fully reopen and commerce getting back to normal. But as has been stated often, our ability to open fully and stay open will be dependent upon our collective effort and discipline in following the established COVID-19 safety protocols.

“The Ministry of Finance is currently reassessing its projections to adjust possible outcomes and policy responses where necessary, even if it means having to make difficult decisions in the future. We will do whatever is necessary and possible within the boundaries of what we can afford,” expressed Turnquest.

As for revenues and expenditures over the last FY, he had this to say:

“During the last fiscal year, revenue performance weakened by $337.1 million to $2.1 billion, comprising 87.2 percent of the revised budget. This happened against the backdrop of subdued economic activity in the final quarter of the fiscal year amid the shutdown of the economy.

“Expenditure grew by $231.7 million to $2.9 billion. Specifically, recurrent expenses increased by $86.3 million to $2.5 billion, featuring approximately $34.7 million in expenditure related to Hurricane Dorian, and another $17.8 million to support the COVID-19 measures. A further breakdown of these expenditures included unemployment assistance, food assistance, and more.

“Similarly, capital outlays expanded by $145.3 million to $368.7 million, owing mostly to water and electricity restoration activities in Abaco and Freeport, clean up, and other repairs in the aftermath of Hurricane Dorian, which totaled $94.0 million for the year.

“In addition, $39.5 million was spent toward COVID-19 initiatives, which mostly consisted of business continuity loans to small and medium businesses through the Small Business Development Center (SDBC).”

As there is no quick fix, indicated Turnquest, to jumpstarting the economy amid the crisis that COVID-19 has placed on economies throughout the world, the full return of the domestic economy is paramount, followed by the country’s number one industry returning to full functionality, expeditiously and safely for all parties involved.

“The bottom line for the way forward is that we need the domestic economy up and running, and we need to get the tourism sector moving again: urgently and safely.

“Public anxiety about the economic crisis is real and valid; however, if lives are at stake, public health priorities must take precedence. If our cases continue to increase, that too will dampen consumer demand, participation in the economy, and curtail any visitor arrivals. No one wants to live in or travel to a COVID-19 hotspot, particularly one that is offshore with medical facilities that are already taxed by local demand.

“Unfortunately, there is no magic wand to reconcile the public health and the economic welfare objectives amid a global pandemic. We must tackle and achieve success on both fronts by working together," he emphasized.

Adopting the ‘We should’ approach to the COVID-19 fight, as Prime Minister Dr. Hubert Minnis has repeatedly alluded to, Turnquest admonished all Bahamians to do the same.

“This is not a job for the government alone. It is dependent on us and our collective behavior. Each one of us must do our part to reduce the transmission of this virus in order to safely restart the economy. In our homes, on our jobs and on the road, each one of us must take this virus seriously and do our part to reduce transmission.

“If we can adhere to the health protocols and govern ourselves with discipline and accountability, we can and will safely reopen our economy. Our fiscal and economic health, and the livelihood of Bahamians depends on it,” concluded the DPM.

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