By NEIL HARTNELL
Tribune Business Editor
THE Deputy Prime Minister yesterday accused the Christie administration of breaching its Parliamentary-approved spending limits, revealing he had to defend its actions before international investors.
K P Turnquest told the House of Assembly that he defended the former government’s multi-million dollar deficit overshoots, and the addition of $2.2 billion to the national debt, because he could “not allow anyone to speak ill of the Government of the Bahamas”. He argued that the Minnis administration had been forced into this week’s US$750 million bond issue by the unfunded spending commitments left behind by its predecessor, which were “outside its Budgetary allowances to make”.
Mr Turnquest hit out after Chester Cooper, the Opposition’s finance spokesman, issued a statement suggesting that the $2.8 billion in ‘investor indications’ received by the bond offering - almost four times’ the principal sum being sought - showed that “the cupboard was never bare” as the current administration has claimed.
“Given that we, the current administration, met a Treasury that was wholly cash-strapped with government agencies holding hundreds of millions of dollars in arrears owed to Bahamian individuals and businesses, and foreign businesses, I don’t know how much ‘barer’ the members opposite could have left the proverbial cupboard,” Mr Turnquest blasted.
“The reason we are borrowing at the current level is we have had to take on the unfunded obligations left by his PLP administration. He’s [Mr Cooper] unsuccessfully trying to distance himself and the PLP from that debt that necessitated the level of borrowing this administration has had to take on. You cannot walk away from that, Exuma and Ragged Island, and you cannot place that on our administration.”
In his June Budget address, Mr Turnquest said the Government was being forced into ‘emergency borrowing’ of $400 million to meet a $70 million ‘hedging’ call, plus unpaid and unfunded bills left by the former administration.
He added at the time that the Treasury faced a $161.284 million payments backlog, representing transactions that required funding, plus another $130.781 million in unfunded commitments representing promises to pay vendors once the goods or services have been delivered.
“Those are commitments, unfunded, that we had to go out and find funding for immediately upon coming to office,” the Deputy Prime Minister reiterated yesterday. “The bond issue seeks to term out and repay that, so that we can better manage our cash flow.”
Arguing that investor response to the $750 million bond showed confidence in the Minnis administration’s “words and deeds”, especially its fiscal consolidation and growth strategies, Mr Turnquest said he and his Ministry of Finance team had been able to answer “the hard questions” asked about government economic policies.
“We had to defend, believe it or not, that [former] administration on the road,” Mr Turnquest revealed. “We had to defend them because we were on the road, and as a nationalist I won’t allow anyone to speak ill of the Government of the Bahamas.”
The Deputy Prime Minister also responded to Mr Cooper’s assertion that the Minnis administration was using “partial or selective acceptance” of accrual-based accounting methods to inflate the $695 million deficit it says the prior government left behind in 2016-2017.
Pointing to the Prime Minister’s confirmation that accrual-based accounting will be rolled-out across the Government by 2022, Mr Cooper alleged that the new administration has been engaging in “accounting tricks”.
Brushing this aside, Mr Turnquest responded: “This is not about accounting treatments. The former administration made hundreds of millions of dollars of spending commitments that were outstanding.
“The facts are that the former administration left hundreds of millions of dollars in unfunded spending commitments that were outside its Budgetary allowances to make. Those are facts.”
The Government’s annual Budget, including its total spending (both recurrent and capital), have to be approved every year by Parliament before the new fiscal year begins on July 1. Mr Turnquest’s comments imply that the Christie administration went beyond its approved spending limits, an action for which it should have obtained prior Parliamentary approval.
The Deputy Prime Minister, meanwhile, went to great lengths yesterday to emphasise that the $750 million bond’s proceeds would not increase the national debt beyond the $722 million in borrowing projected for the 2017-2018 fiscal year.
He explained that the bond is only refinancing, and replacing, short-term borrowings and securities that were already obtained to finance this borrowing - meaning it will not add to the $722 million figure.
“The increment to the outstanding debt was, and remains, $722.3 million,” Mr Turnquest said, with this figure being the projected increase to the Bahamas’ $7 billion-plus national debt.
Breaking down the Government’s borrowing/financing plans, the Deputy Prime Minister said $400 million was needed to cover the 2016-2017 fiscal year’s arrears, with a further $322.3 million needed to cover the projected 2017-2018 deficit.
Another $600.2 million is required for refinancing/debt repayment but, again, this will not add to the Government’s deficit or national debt as it is merely “rolling over existing debt”. Mr Turnquest said this sum would have “a neutral impact on debt levels”.
Responding to claims that the $750 million bond issue lacked transparency, and was fiscally “imprudent”, the Deputy Prime Minister said: “Nothing could be further from the truth.
“There is absolutely nothing devious, surreptitious or imprudent about this transaction, or the way in which it was handled.”