Deputy Prime Minister and Minister of Finance Peter Turnquest. (File photo)
By RASHAD ROLLE
Tribune Staff Reporter
THE deficit for the fiscal year will balloon by more than $430m because of Hurricane Dorian, with the government expecting to spend nearly $230m to recover from the storm while anticipating a revenue hit of about $215m, according to Deputy Prime Minister and Minister of Finance Peter Turnquest.
He stressed in the House of Assembly yesterday evening that his figures are preliminary. He expects a more substantial assessment of the storm’s impact when the United Nation’s Economic Committee for Latin American and the Caribbean (ECLAC) and the Inter-American Development Bank (IDB) completes their full damage and loss assessment of Abaco and Grand Bahama.
The fiscal deficit for the 2019-2020 fiscal year will likely be about $573.4m, he said. In May, the government forecast a deficit of $137m; Dorian has caused that projection to increase by $436.4m.
The East Grand Bahama MP revealed that the National Emergency Management Agency has received $5.8 million in donations from various private, corporate, foreign government, intergovernmental and non-profit organisations since the storm.
“So far, $1.9 million is being spent on the purchase of recreational vehicles which housed relief workers and volunteers and $2.8 million was spent on the mobilisation of dome structures to provide the mentioned temporary housing for displaced persons,” he said.
He did not say how much the government will borrow, noting that discussions are ongoing over this with leaders of local commercial banks.
Of the IDB’s $100 million contingency loan for natural disasters, $30 million has already been allocated for electricity restoration, $15 million for water restoration, $30 million for social welfare––including a possible extension of unemployment benefits––$15 million for clean-up efforts and one million for the reimbursement of evacuation and shelter costs, he said.
The government is using the $12.9 million from the Caribbean Catastrophe Risk Insurance Facility (CCRIF) and will deploy $20 million from the extinguished dormant account funds for disaster recover activities. Mr Turnquest said $10 million of this will be earmarked to help small and medium sized enterprises as part of the $10 million loan guarantee and equity financing programme which will let eligible SMEs secure up to $500,000 in financing.
“When it comes to spending, initial estimates show we will need to spend an additional $222.4 million, with a split of $80.9 million for recurrent spending and $141.5 million for capital,” he said. “These funds will primarily be used for rebuilding critical infrastructure on Abaco and Grand Bahama, including electricity and water serves, the reconstruction of affected medical facilities, the construction of temporary housing and the delivery of targeted government services and assistance to affected populations.”
Five million dollars to fund the new Ministry of Disaster Preparedness, Management and Reconstruction will come from the dormant account funds, he said.
Because the projected $573 million deficit exceeds the $137 million fiscal target identified in the Fiscal Responsibility Act, Mr Turnquest said “the government is required to devise and present a fiscal adjustment plan outlining three components: the reasons for the departure from the fiscal target, the measures the government intends to take to get back on track and an estimate of how long it will take to do it.”
He added: “As required by the act, we intend to provide such a plan to both the Parliament and the Fiscal Responsibility Council in November as part of the upcoming 2019 fiscal strategy report. We will also present a supplementary Hurricane Dorian budget that will outline the adjusted revenue and spending positions, alongside a request for the additional borrowing authorisations.”
Drawing implicit contrasts with the previous administration, Mr Turnquest said the Minnis administration put the government in a better position to respond to hurricanes of the magnitude of Dorian through several measures: by putting in place the “IDB contingent line of credit, the legal provisions to provide access to the use of extinguished dormant account proceeds, the decision to reinstate its insurance cover with the CCRIF and the enhanced revenue measures approved in 2018.”
Although the administration’s fiscal consolidation efforts have taken a hit from the storm, he said “this is not and will not be a licence to return to the days of reckless and feckless fiscal management.”
“This combination of substantially reduced revenue and critically required expenditure will create a substantially different budgetary trajectory over the upcoming budgetary periods,” he said. The Ministry of Finance will work with agencies to implement a ten percent budget cut across government agencies, he said, adding that this will not affect plans related to critical initiatives for Abaco and Grand Bahama.