By KHRISNA VIRGIL
Deputy Chief Reporter
THE Christie administration yesterday moved a resolution for a loan of up to $150m to defray the costs of this country’s recovery and reconstruction efforts as a result of not only Hurricane Matthew, but for last year’s Hurricane Joaquin.
According to Prime Minister Perry Christie, the damages caused by Matthew are estimated at $600m, while Joaquin imposed costs estimated at around $200m.
The combined total of $800m as a result of both storms, Mr Christie said, equates to 40 per cent of the national budget or 9 per cent of GDP.
Given the hefty price tag attached to the devastation left behind by both hurricanes, State Minister of Finance Michael Halkitis stressed that it was essential that the government accessed the funds as it was not possible to finance the recovery efforts from the existing budget.
“The use of the funds by our preliminary indications is that 60 to 70 per cent of the funds will be used for restoration of public infrastructure which is roads, public buildings, schools, etc,” Mr Halkitis said, “the remainder of the funds will be used for citizen assistance programmes.”
“In light of this damage and devastation the government must respond and we must respond quickly and we must respond adequately.
“It is not possible to finance the recovery efforts from the existing budget. Therefore we are here today to propose this resolution to raise up to $150m to finance the reconstruction and recovery efforts.
“We have had discussions with the Central Bank and with the financial institutions and we are confident that should we need to access the full amount, we will have the commitment for the financial institutions to take up the full amount. We have this commitment to raise all of the money should we require to use the full $150m and I want to make that point because it indicates that we have the capacity to have access to money.
“We will raise this financing at rates below the prime rate which is less than 4.5 and the prime rate is 4.75. My advice is we will raise this money at just over 4 per cent.”
Mr Christie further explained that the Ministry of Finance designed a two-tranche approach to dealing with the funds. He said the funds were exclusively for the reconstruction effort
He said: “The Royal Bank of Canada is the government’s banker. It is with gratitude and pride that I note that all of the banks contacted have readily agreed to participate in the financing that we are about to present by way of resolution to Parliament.
“I also note for the information of members that ordinary citizens and residents of the Bahamas have also expressed an effort in participating in this effort and in this respect the Ministry of Finance has designed a two-tranche approach. A tranche for commercial banks for up to $120m and a tranche for the public in the amount of $30m.”
“The Central Bank has recommended that non residents with a nexus to the Bahamas be allowed to participate in this offer. So these are high net worth individuals who live in the Bahamas who the Central Bank would facilitate their participation in the $30m offering.
“Yesterday (Tuesday) my government accepted the recommendation of the Central Bank. It is for me therefore to indicate that these funds would be exclusively used for the reconstruction effort.”
He added: “The initial focus on the reconstruction effort has been in ensuring restored access to essential services such as electricity and water. The next phase will be the repair and reconstruction of homes and parallel to that phase reconstruction of public infrastructure would be addressed. Mr Speaker the entire government would be involved in all phases of this effort working with local and international partners.”
Whereas Article 129 (1) of the Constitution requires the Minister of Finance, before the end of each financial year, to cause to be prepared annual estimates of revenue and expenditure for public services during the succeeding financial year, which shall be laid before the House of Assembly and which estimates have been laid before the House of Assembly;
And whereas Hurricane Joaquin in October 2015 and created significant damage to the infrastructure and personal property of residents of Acklins, Crooked Island, Long Cay, Mayaguana, Inagua, Long Island and San Salvador,
And whereas Hurricane Matthew in October 2016 also created significant damage to the infrastructure and personal property of North and Central Andros, Berry Islands, New Providence and Grand Bahama;
And whereas the government has found it necessary to undertake additional borrowings to finance Hurricane Matthew and Hurricane Joaquin recovery and reconstruction efforts;
And whereas from time to time the House of Assembly has approved borrowing by way of loan agreements with banks to finance approved expenditure;
And whereas by section 18 of the Financial Admission and Audit Act, 2010 (No. 26 of 2010), it is provided that no loans shall be raised by the government and no guarantees involving a financial liability shall be binding upon the government unless entered into with the prior approval, of the House of Assembly, signified by Resolution thereof:
Now therefore be it resolved that this House authorises the Minister of Finance to raise by way of loan or loans a sum not exceeding $150m in aggregate the currency of the Commonwealth of the Bahamas and approves the proceeds of the said loan being used for the purposes of defraying expenditure for recovery and reconstruction efforts as a result of Hurricane Matthew and Hurricane Joaquin.