By NEIL HARTNELL
Tribune Business Editor
The government likely faces a $200m revenue shortfall as a result of Hurricane Dorian's devastation, the deputy prime minister revealed yesterday.
KP Turnquest said the category five storm had inflicted a "not insignificant loss to the economy" given that the two islands it decimated - Abaco and Grand Bahama - together account for between 15-20 percent of Bahamian gross domestic product (GDP).
"Our initial projected estimates on revenue shortfall is around $200m, but we are still in the process of finalising those numbers. Grand Bahama and Abaco represent somewhere between 15 percent and 20 percent of our GDP, so this is not an insignificant loss to the economy."
The government's $2.626bn revenue projection for the 2019-2020 fiscal year now faces being cut to around $2.426bn, with such a loss increasing the fiscal deficit - the extent to which government spending exceeds revenue - to around $300m by itself.
Increased public spending and borrowing to finance Dorian reconstruction will likely add several hundred million more to the deficit, but Mr Turnquest countered: "Hopefully the reconstruction, and the inflows of insurance proceeds and people putting to work to rebuild the economy, hopefully that would offset the tourism losses we expect.
"Obviously this event would have thrown the budget off, so we do have to come back with a revised plan. The Fiscal Responsibility Act requires us to come in November with our fiscal projection and outlook for the next budget season.
"So we will make whatever necessary adjustments during that time. Then, when we come back to Parliament to present that revised report in January or early February, we will be able to outline exactly what has happened, what the effect has been and how we intend to adjust our fiscal outlook going forward, to account for it and to get us back on track."
When asked about the promised $800 lump sum payment that the government had promised to pay to civil servants at end-August, Mr Turnquest said: "We are still considering it, and what we can comfortably fit in with our window.
"As you all know this is a significant unexpected event for the government, so we have to make sure we properly budget and consider all of the ramifications for our expenditure over the next couple of months for sure.
"Until we have determined, and been able to put concrete numbers to what our outlook is going to look like, at the moment it's on hold and we see how we can adjust it maybe looking towards the end of the year to fit it in."