By NEIL HARTNELL
Tribune Business Editor
The Government was last night fearing Hurricane Irma will inflict “another dramatic financial blow” to the Bahamian economy, matching Matthew’s $600 million damage from a year ago.
K P Turnquest, the deputy prime minister, told Tribune Business that this nation could “ill-afford” another Matthew-type hit given the economic and fiscal constraints under which it is currently labouring.
“We’re obviously very concerned,” he said, as Irma starts to bear down upon the Bahamas with what forecasters believe will be Category 4 winds by the time it hits this nation.
“This seems to be a monster storm, maybe even surpassing Matthew, which we know brought significant destruction to our country and the lives of so many Bahamians.”
Matthew, which struck the Bahamas with Category three/four winds, left an estimated $600 million worth of damage in its wake (and at least $400 million in insurance claims) after it battered New Providence and Grand Bahama - the two major population centres.
Moody’s estimated it cost the Government revenues equivalent to 2.4 per cent of GDP (around $214 million) as a result of depressed economic activity, which added to the $100 million worth of damage inflicted upon the southern Family Islands by Hurricane Joaquin in 2015.
Referring solely to Matthew, Mr Turnquest said: “We know the cost of that event was significant in terms of restoration and loss of revenue, which had a significant impact on the Budget.
“We are very concerned about the nature of this storm, but hope Bahamians have taken note of the experience of last year and protected themselves by insuring their property and taken precautions to protect their property in the particularly storm.”
The Government was also forced into an emergency $150 million borrowing post-Matthew to finance essential infrastructure and public building repairs, and bring relief to storm-ravaged Bahamians. This ultimately expanded the 2016-2017 fiscal deficit from a projected $100 million to $350 million (according to the Christie administration),or $500 million and even $636 million (according to the current government and Moody’s, respectively).
With the Bahamas still “paying” for Matthew and Joaquin, Mr Turnquest agreed that any impact from Irma was especially ill-timed.
“With the economic and financial constraints we have, we can ill-afford another storm of the magnitude of Matthew,” Mr Turnquest told Tribune Business.
“We hope at the end of the day resources will be better managed, but in the best case scenario this represents a dramatic financial blow, particularly in Grand Bahama where we have not recovered from Matthew yet and many residents have significant damage to their homes and the Grand Lucayan is still not open.
“Any further damage will be a great setback which we can ill-afford here.”
James Smith, a former finance minister, agreed with Mr Turnquest that a direct strike by Hurricane Irma on the Bahamas’ major economic centres (New Providence and Grand Bahama) will be something this nation can “ill afford”.
“It depends how we get hit,” the CFAL chairman told Tribune Business, “but you can judge it by what happened with Matthew. It was estimated at $400 million out of our GDP, and if it’s anything like that we will be looking at the same thing. For us, we could be looking at a small disaster.
“It would be a setback we can’t really afford. Let’s hope we don’t see it. You simply can’t plan for these things. We’ll have to pay for it from the Budget, and simply go to additional borrowing. It’s more of the same.”
Irma’s approach, and potential impact, are likely to revive debate around the need for the Bahamas to establish some type of catastrophe or hurricane relief fund to finance post-storm recovery and restoration.
John Rolle, the Central Bank’s governor, told Tribune Business last week that while foreign exchange demand indicated a “small uptick” in consumer spending, the economy was still suffering lingering effects from Matthew.
“There is growth, but we are still feeling the effects of the hurricane, unfortunately,” he told Tribune Business, pointing to Grand Bahama and other hotel inventory that was being taken off-line for repairs.
The Government, already preparing for Irma’s potential arrival, last night warned retail merchants such as food stores, pharmaceutical suppliers and building materials merchants against exploiting pre-storm demand by ‘price gouging’.
Warning that this, as well as the ‘hoarding’ of supplies for so-called speculation and profiteering, were criminal offences, the Prime Minister instructed the Prices Commission to monitor the situation and inform the Attorney General’s Office should any infractions be found.