By YOURI KEMP
The Ministry of Finance's top official yesterday forecast that the national unemployment rate could surge back to over 13 percent next year due to the economy shrinking from Hurricane Dorian.
Marlon Johnson, the acting financial secretary, gave the grim prediction as he told the annual Accountants' Week conference that the estimated total loss inflicted by the category five storm is around $2.5bn - the same estimate provided recently by Central Bank governor, John Rolle.
The swift return to double-digit unemployment figures, with the national rate having dropped to 9.5 percent in the last Labour Force Survey from May 2019, is a blow to Bahamian society but not surprising given that all economic activity in Abaco has ceased while Freeport and Grand Bahama are still recovering.
Using data from that last Department of Statistics survey, which placed the Bahamian workforce at 237,525, a 3.5 percentage point jump in the unemployment rate would take the total number of jobless to 30,878 - an increase of 8,313 upon the May 2019 numbers. Abaco and Grand Bahama had total labour forces of 14,620 and 32,825, respectively, pre-Dorian based on the Labour Force Survey.
Mr Johnson, meanwhile, echoed the revised International Monetary Fund (IMF) growth forecast for The Bahamas by projecting that GDP expansion for 2019 will be halved from near two percent to one percent (the IMF forecast is from 1.8 percent to 0.9 percent). He also projected a contraction in the economy for 2020, with an expected pick up in 2021led by reconstruction activities in Abaco.
Reiterating that the fundamentals of the government's fiscal consolidation strategy remain intact and will post-Dorian, Mr Johnson reaffirmed that the government is looking to borrow close to $500m to plug the deficit gap created by the hurricane.
He said: "What we will have to borrow, to put it in stark terms, is the difference between what we brought to Parliament and have gotten, and what we have gotten and where believe the deficit will end up.
"We anticipated that the original deficit projection was at $137m, and that deficit will [now] shoot up over $500m. The only two ways the government can raise revenue is to tax and another is to borrow. The government said that instead of raising taxes it has decided to borrow to meet the debt."
Mr Johnson confirmed the government is looking at a variety of financing sources, including the Inter-American Development Bank (IDB) and domestic commercial banks, to make up the shortfall. He added that the Government is aiming to keep recurrent expenditure at 20 percent of GDP without increasing taxes.
The Ministry of Finance official said the deficit may grow to more than $650m, but that number will "modulate" as the Government "tweaks" its numbers in light of the forthcoming economic impact assessments that have been done post-Dorian
Dr Hubert Minnis said in an address to Parliament that the Government is waiting on the impact assessments conducted by the IDB and United Nations (UN) Economic Commission for Latin America and the Caribbean (ECLAC).
Despite the $200m "wipe out" of revenues and unplanned expenditure to deal with Dorian, Mr Johnson said electricity restoration costs for Abaco are estimated at $80m while repairing the Water & Sewerage Corporation's infrastructure is pegged at $15m, inclusive of expenditures such as shipping persons and material back and forth from Abaco.
Mr Johnson said there will be a "radical" increase in spending over the next few years.