Deputy Prime Minister Peter Turnquest.
By RASHAD ROLLE
Tribune Staff Reporter
THE deficit for the fiscal year has ballooned to $677.5 million because of Hurricane Dorian, prompting the government's plans to borrow $507.9 million to meet the shortfall.
Deputy Prime Minister and Minister of Finance Peter Turnquest said in the House of Assembly yesterday that he will table resolutions for the borrowing in two weeks along with a supplementary budget to address expenditures and revenue losses associated with Dorian's passage.
The government initially projected a deficit increase of $430 million.
In compliance with the Fiscal Responsibility Act, Mr Turnquest tabled a fiscal strategy report yesterday that highlighted the challenges the country faces recovering from the monster storm.
The economy, according to the strategy report, was expected to grow by 1.7 percent in 2020 but is now projected to contract next year by 0.6 percent because of anticipated weakness in tourism activity in the first half of 2020.
"Employment conditions in The Bahamas are also expected to worsen due to the disruption to business activity and productive capacity in both Abaco and Grand Bahama, which account for 2.6 percent and 13.8 percent of the labour force," the report said.
In September, the country's tourism sector registered a 12.8 percent contraction compared to the same period last year, with air and sea visitors posting declines of 14.7 and 12.4 percent respectively.
Responding to Hurricane Dorian will cause a departure from the government's fiscal targets for the next five budget periods at least, with compliance possibly resuming in the 2024/2025 fiscal year.
According to the fiscal strategy report, the percentage of debt to GDP is projected to increase to a peak of 66.2 percent in 2021 before declining. However, the report notes there are potentially major risks to the government's projections, including another hurricane or less economic growth than anticipated.
For this fiscal year, the government projects revenue loss of $236 million and an expenditure increase of additional $302.6 million.
Mr Turnquest said: "It is important to note that, in the aftermath of Hurricane Dorian, the government has integrated into the current budget year and the medium term a number of policy initiatives that will serve to incentivise and ignite economic recovery and growth. Among these initiatives is the designation of the special economic recovery zones (SERZ) in Abaco and Grand Bahama, facilitating an extension in NIB unemployment benefit payments, invoking the exigency order, and injecting an additional $10 million in micro, small and medium sized enterprises (MSMEs). Furthermore, the foreign direct investment (FDI) projects poised for Grand Bahama such as the redevelopment of the Grand Lucayan properties and the new cruise port are anticipated to boost economic activity in the near term."
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