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Dpm Rejects Bahamas 'Debt Crisis' Description

Deputy Prime Minister Peter Turnquest.

Deputy Prime Minister Peter Turnquest.

By Neil Hartnell

Tribune Business Editor

nhartnell@tribunemedia.net

The deputy prime minister has rejected assertions that The Bahamas is one of 52 nations trapped in a debt crisis, arguing that the country remains "in a relatively good position".

K Peter Turnquest told Tribune Business prior to last night's address by the Prime Minister that the Government "doesn't see any kind of challenge" in meeting its $1.3bn deficit financing needs for the 2020-2021 fiscal year despite Jubilee Debt Campaign, a major global anti-debt campaign, branding The Bahamas as a country "in a debt crisis".

The group based its analysis on International Monetary Fund (IMF) estimates of how much government revenue will be used to finance The Bahamas' external (foreign currency) debt payments over the next five years.

Describing this as "the amount a government spends on debt payments which leave the country (principal and interest) as a percentage of that government’s revenue", the data released by Jubilee Debt Campaign showed this as hitting 20.6 percent in 2020 before peaking at 21.2 percent in 2022 and 23.7 percent in 2024.

If accurate, such projections imply that more than $1 out of every $5 earned by the Government in revenue will be used to meet foreign currency debt payments, thereby sucking increasing sums away from critical public services such as healthcare, social security, education and the security forces.

"Jubilee Debt Campaign’s analysis [looks at] whether a country is already suffering from a debt crisis - where debt payments are undermining a country’s economy and/or the ability of its government to protect the basic economic and social rights of its citizens, for example by providing access to healthcare, education and social protections - or whether it is risk of entering one due to the debts of the private or public sector," the campaign group said.

However, the only other indicator taken into account in Jubilee Debt Campaign's analysis was The Bahamas' persistent current account deficits, which result from the import dependency of its economic model. And its analysis also appears relatively static, not taking into account this nation's ability to restructure or reschedule its debt.

Still, with $2.9bn worth of total gross deficits forecast for the the three years to 2021-2022, and the Government's direct debt forecast to breach the $10bn barrier and mid-June 2022, many observers are becoming especially uneasy that The Bahamas is heading towards real fiscal peril - especially as the interest (debt servicing) costs alone are soon projected to exceed $400m annually.

However, Mr Turnquest, speaking ahead of last night's near-total New Providence lockdown, said the Government had already obtained around $300m in "bridge financing" from multilateral lenders such as the Inter-American Development Bank (IDB), the Caribbean Development Bank and the World Bank initiative that guarantees loans from the private sector.

Confirming that these funds were scheduled to arrive at the end of last week, the deputy prime minister said the Ministry of Finance's discussions with The Bahamas' existing bondholders and global capital markets had not raised "any significant concerns" ahead of the country's planned foreign currency bond placement in fall 2020.

That will generate the bulk of the Government's $1.3bn deficit financing, with Mr Turnquest disclosing that it was "waiting for the market itself to settle down" and interest rates "to level off" and move "in our favour" before determining the placement's timing.

"We are still in a relatively fair position," he told Tribune Business, "and we do not contemplate any challenge in making our payments or refinancing if that becomes the need. We have already finalised our bridge financing and are going to our bond issue in the fall, all things being equal."

Mr Turnquest, though, conceded that the Government was "actively modelling a number of scenarios in case we have to continue programmes" put in place to support individuals, businesses and the wider economy past the end-September deadline when these are due to currently end.

These initiatives include the Business Continuity Loan initiative, the tax deferral and credit programme, and various other schemes designed to provide income replacement and support for thousands of Bahamians.

"Beyond that it would be reasonable to anticipate that the National Insurance Board (NIB) and the Government will find it reasonably challenging to carry forward, but we are committed to supporting the Bahamian people as best we can, so that means we will have to make some future adjustments," Mr Turnquest said, indicating that funding will be reallocated should it become necessary.

"We don't anticipate any further borrowing over and above what got approved from Parliament," he added. "The NIB fund itself remains solid, and our ability to leverage and receive credit if we have to remains intact. I'm fairly comfortable with where we are.

"We continue to be cautiously optimistic that we're going to see some sort of activity in the tourism industry, and even in the domestic economy, towards the end of October. It is our original projection. There are so many variables it's hard to predict what's going to happen. We all depend on health."

Comments

JackArawak 3 months, 1 week ago

Doesn't look good. They spin just about every story out there, I'm pretty sure he is sugar coating this forecast

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Amused 3 months, 1 week ago

This idiot still spewing garbage.

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tribanon 3 months, 1 week ago

We have a mentally disturbed and dangerously unstable PM, and a minister of finance in denial. Well "Hello Houston", we have one hell of a most serious problem here.

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trueBahamian 3 months, 1 week ago

He needs to speak the truth. The country is in bad shape and they don't have a plan. They don't surround themselves with the brightest minds in our country. They surround themselves with the incompetent, or the "yes men and women". So, we will never get solutions to problems.

Question: Why is the former marketing guy from BTC the Financial Secretary? One example of why we're going down the toilet.

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Amused 3 months, 1 week ago

Marlon Johnson is just clueless as they come

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tribanon 3 months, 1 week ago

But he's willing to kiss Minnis's arse which is something the best and brightest minds in our country naturally refuse to do. And just about everyone knows there's nothing more egocentric Minnis loves than having his arse kissed over and over again by others who blindly obey him to the detriment of the Bahamian people.

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sheeprunner12 3 months, 1 week ago

The Government needs to "tear up" how it earns Revenue and begin to craft a new regime that will cater to the post-Covid realities of our country ....... But there are too many special interests who benefit from the present tax regime that sucks every dime that it can from the poor and allows the rich to enjoy the fat of the land.

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