Deputy Prime Minister K. Peter Turnquest, Minister of Finance and Member of Parliament for East Grand Bahama announced in the House of Assembly yesterday, Wednesday February 13, during his communication to the 2019 2020 Supplementary Budget Debate, that while the government is seeking to borrow additional funding associated with the reconstruction and recovery of the islands and residents impacted by Hurricane Dorian last year, there will be no increase in taxes or the introduction of any new taxes to absorb the exorbitant costs related to such.
“There is near universal consensus that we must honor our obligations to Grand Bahama and Abaco. In fact, the Opposition has criticized us for not providing even more tax concessions. That is all well and good, but we cannot wish away the real cost of reconstruction. And, we can’t forget that before Dorian, the Government was already projecting to be $137 million short in terms of deficit financing. I remind members opposite that our deficit of $212 Million last fiscal year happened to be the lowest deficit in nearly a decade, thanks to our ability to develop and follow through on effective budgetary management.
“As much as we have been proud of our successes to date with fiscal consolidation, our efforts were no match for the ferocity of Hurricane Dorian. These efforts have helped us to be in a better position, but they were not enough to mitigate the full impact of this unprecedented storm.
“Our tabling to Parliament and the Bahamian people of a Supplementary “Hurricane Dorian” Budget presents the facts of all hurricane related expenditure and shows the revised budgetary estimates for the remainder of 2019/20,” said Turnquest.
Listed below are the hurricane related expenditures as outlined by the Minister of Finance:
• It shows the $232.6 million in revenue loss as a result of tax revenue lost and
• It shows the $182.7 million in new Hurricane Dorian expenditures
• It shows the $119.9 million in liabilities deferred by previous governments
• It shows the $5.5 million in new interest charges as a result of our new debt.
“The price tag of these necessary and unavoidable expenditures is $540.7 million,” said the DPM.
“Mr. Speaker, we are not obscuring or hiding the fact that some of the expenses in our revised estimates are targeted at other critical governing priorities. These are important policy commitments that we felt merited immediate consideration. Our accounting for them in the supplementary budget further solidifies our commitment to transparent fiscal management.
“The $4.5 million we allocated for nurses’ back pay, for example, was a debt we could not shift down the road. The $20.4 million for renovations at the Princess Margaret Hospital were and are critical for the delivery of quality healthcare for Bahamians.
“The truth of the matter is that the financial laws of The Bahamas contemplate contingency expenditure during the year, which is why we have a Contingency Fund. All administrations make use of this fund to address new and compelling priorities. The supplementary exercise gives us an opportunity to replenish the Contingency Fund, and this Government has availed itself of the opportunity to get this done in the most open and transparent way.
“What we have done to improve the integrity and credibility of our fiscal plan is to address these liabilities now.
Unlike our predecessors, we are not going to misrepresent the reality of our situation and seek to obscure our plans and hide from the truth. As is our way, we are explaining to the Bahamian people what we are doing, and to advising them of the resulting implications of our plans.”
He shared that while a number of donations were made to The Bahamas throughout the world, which the Government is truly grateful and appreciative of, truth be told, it does not cover the amount of funding needed to rebound from Dorian’s devastation.
“Mr. Speaker, unfortunately, the government has very few immediate and realistic options to offset the legitimate obligations I just laid out.
“We received a $12.8M payout from our Caribbean Catastrophic Insurance Facility (CCRIF) as a result of a restructured policy, which I am proud to say we pioneered. In the past, insuring with the CCRIF had unfortunately become politically charged. Not everyone was convinced the insurance scheme was meeting our needs as an archipelagic nation.
“We successfully renegotiated a better deal for The Bahamas, tailoring the policy to separate the archipelago into three geographic zones with unique parametric triggers for each region. Rather than throwing the baby out with the bathwater, we recognized that flexible insurance that allows for tailored coverage is essential to our multi-layered approach to disaster risk management and for meeting our country-specific disaster needs.
“Aside from the CCRIF, we amended the law to allow funds transferred from the expired Dormant Accounts at the Central Bank to be used for disaster relief. The Government earmarked $20 million from this fund: $10 million of which is to support Micro, Small and Medium-Sized Enterprises (MSME) capital grants and credit programmes.
“If you look at the math, it speaks for itself: We have $540.7 million in new and necessary financing requirements and only $32.8 million in offsetting income. We are also looking at the possibility of GDP shrinking by one percentage point as a result of Hurricane Dorian.
“As for donations, they are far less than what the public perceives. Many of the public pledges that have been reported are actually in-kind and not yet received, and many of them are actually donations to private sector organizations and not the government,” said Turnquest.
“According to data from the National Emergency Management Agency (NEMA), which receives donations on behalf of the Government, as at January 31, 2020, approximately $9.4 million was received as actual cash donations, and another $2.8 million in kind.
“While this is certainly appreciated and has helped to cover costs associated with the acquisition of Recreational Vehicles (RV) for volunteers and staff that are on the ground working in Abaco and Grand Bahama, as well as with the temporary dome structures that are currently being erected in Spring City, Abaco, it simply is not enough to cover the greater cost of recovery of Hurricane Dorian. When you compare $9.0 million in donated funding to cover over $400 million in Dorian expenses and revenue losses, it is plain to see that our own resources are not enough for this massive response.
“Mr. Speaker, Faced with this reality, the government decided that it will not impose additional tax burdens on Bahamians to cover the cost of recovery. More taxes could slow down the already strained economy.”