By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Bahamas must not be “aggressive and spend money before we need to” on Hurricane Dorian restoration, a former Chamber of Commerce chairman warned yesterday.
Gowon Bowe told Tribune Business it needed to craft a recovery strategy that minimised disruption to its long-term fiscal strategy while still permitting the rebuilding of communities devastated by the category five storm.
He added that the $436m deficit shock unveiled by K Peter Turnquest, deputy prime minister, represented where The Bahamas ultimately needed to reach but argued that the sums unveiled did not have to be spent all at once.
“The one element that I’ve shared with the deputy prime minister, and have said repeatedly, is I think we have to be very strategic in looking at the numbers,” Mr Bowe explained.
“When he speaks to the spending that needs to happen in terms of restoring infrastructure, restoration of government services, medical facilities, we have to be careful we don’t be aggressive and spend money before we need to.
“That’s not saying don’t have a deliberate action to cause affected communities to restore to normalcy as quickly as possible. It’s saying it’s important to appreciate the restoration effort is not six to 12 months to the end of the fiscal year, but a more multi-year project.”
Mr Bowe said the Government needed to deploy sufficient resources in proportion to the needs of, and what was happening in, the Dorian-impacted areas. Given that many areas of Abaco, in particular, had already depopulated he suggested it made no sense to immediately offer a full menu of government services.
“We must be deliberate,” he reiterated. “It’s not spending over the next six months; it’s over the next three to five years to restore these places to where they were before.” Mr Bowe suggested The Bahamas adopt the approach the US followed in Hurricane Katrina’s aftermath, where communities, businesses and infrastructure were restored in a phased, systematic way.
“You have to make sure you balance the distribution of funds with what’s in those locations,” Mr Bowe told Tribune Business. “There’s recognition of that. The numbers should be seen as what we have to do, and we have to develop a strategy to create least disruption to fiscal performance.”
Mr Turnquest told the House of Assembly that the Ministry of Finance’s preliminary estimates forecast a more-than-quadrupling of the 2019-2020 fiscal deficit compared to Budget projections back in May.
He said Dorian was now likely to wipe out $215m, or eight percent, of full-year revenues while extra spending to rebuild utility infrastructure, public health clinics, temporary housing and to deliver government services in the impacted areas was pegged at just over $222m.
While Abaco, at 6.4 percent, and Grand Bahama at 7.3 percent, collectively accounted for 13.7 percent of total government revenues in the 2018-2019 fiscal year, Mr Turnquest said the two islands’ contributions had “always been an important component for delivering on the government’s overall budgetary projections”.
He added: “Early estimates prepared by the Ministry of Finance point to a revenue shortfall of nearly $215m, or eight percent of the overall revenue projected for fiscal year 2019-2020 as a direct result of Hurricane Dorian.
“When it comes to spending, initial estimates show we will need to spend an additional $222.4m, with a split of $80.9m for recurrent spending and $141.5m for capital. These funds will primarily be used for rebuilding critical infrastructure on Abaco and Grand Bahama, including electricity and water services, the reconstruction of affected medical facilities, the construction of temporary housing and the delivery of targeted Government services and assistance to affected populations.”
Totalling up the extent of the damage, Mr Turnquest told the House: “Given that our revised projected revenue will be in the region of $2.414bn, and expenditure at $2.988bn as a result of Hurricane Dorian, the fiscal deficit for fiscal year 2019-2020 is likely to be nearly $573.4m, or an elevated 4.5 percent of GDP.
“This exceeds the $137m, or 1 percent fiscal target, as prescribed by the Fiscal Responsibility Act.” The Act requires the Government to present a fiscal adjustment plan as a result of this miss, detailing the measures it will take to get its consolidation plan back on track and estimates of how long it will take to do so.
Comments
empathy 4 years, 6 months ago
This is very good advice from Mr. Bowe. It’s always helpful to see what others have done (New Orleans in Hurricane Katrina) and proceed using current Best Practice. His observation that Abaco, especially, has been “depopulated” gives the crux of his argument greater force so we can “phase in” infrastructure and spending into these communities.
These circumstances also gives the residents of Abaco and the government an opportunity to “get Abaco’s development right”. City centres, business and residential areas can be planned and specific infrastructure placed with this overall plan in mind, not some haphazard costly and rush mishmash to appease the political punditry.
BahamaPundit 4 years, 6 months ago
Repost
So they gonna borrow hundreds of millions from China. Pad their pockets and build shabby crap and leave next election with pockets full and Bahamians more broke than ever before. Why not have the private sector build Abaco back in their own way and time. Let donations do the heavy lifting and not borrow a single dime. We all know that the hurricane damage will cost several billion to fix. We all know that Abaco will take ten to fifteen years to be built back to the way it was before the hurricane. We all know that Government borrowing goes hand in hand with rampant corruption and selling the Bahamian people down the river! We all know that China with their debt trap loans will control the entire country once all the ink has dried. We all know now that Bahamian independence was a complete scam pulled off by carpetbaggers looking to score easy loot and that African governments can best be compared to onions, because all they do is make you cry.
BahamaPundit 4 years, 6 months ago
Wise words Mr. Bowe. With Hurricane Dorian, the Bahamian motto should be: If you don't have it, don't spend it. Learn to make do. Time to put on the big boy pants. Bahamian politicians love shiny new. What's to say another hurricane doesn't hit the same spots next year. We need to wait and see and complete reconstruction in phases.
crawfish 4 years, 6 months ago
Well, there is one thing the Government can bank on; should they drag their feet on getting Abaco back to some semblance of its former self, they will have to tighten their belt or look to Red China for a sweet loan. Better they bite the bullet and get the economy churning as it was prior to the hurricane, and reap the benefits of enhanced inflows to the Treasury. The world will not wait for three to five years for Abaco to recover. People take vacations every year. When they find another 'spot', Good Bye Bookie.
Donnaree 4 years, 6 months ago
You'll who talking really don't know the Abacoians they are a resilient set of people. The Abacos will bounce back quicker than you all think. I tell you that. But yes I agree don't start borrowing no money from China or else where yet. And according to what I've heard about the insurance collected on those government buildings, government has enough to repair all of them. Stop burdening the Bahamian people down with debt!
Donnaree 4 years, 6 months ago
You'll who's talking really don't know the Abacoians they are a resilient set of people. The Abacos will bounce back quicker than you all think. I tell you that. But yes I agree don't start borrowing no money from China or else where yet. And according to what I've heard about the insurance collected on those government buildings, government has enough to repair all of them. Stop burdening the Bahamian people down with debt!
Well_mudda_take_sic 4 years, 6 months ago
LMAO - Minnis isn't listening and certainly is not about to waste the once in a lifetime opportunity created for him and his lucky cronies by the crisis in the aftermath of Dorian. Full steam ahead.....borrow, borrow, borrow and spend, spend, spend....like there's no tomorrow!
bcitizen 4 years, 6 months ago
There was no phased approach when it came to them taxing Abaco. Generating almost as much revenue as GB with half the population and I still don't believe the revenue numbers collected are accurate. They have always tried to hide what revenue was generated in Abaco.
Sign in to comment
Or login with:
OpenID