By YOURI KEMP
Tribune Business Reporter
ykemp@tribunemedia.net
The Ministry of Finance has revealed that the national debt has ballooned to $8.24bn for the fiscal year 2019/2020 in its fourth quarter fiscal snapshot. This places government debt at 68.4 percent of GDP, up from $7.527bn in fiscal year 2018/2019.
The Ministry of Finance has further shared that public debt interest payments grew by $10.6m or 3.2 percent to $339.1m for the year representing some 90 percent of the revised budget. Approximately $199.2m or 58.7 percent was directed to domestic creditors, and the balance to foreign lenders. Debt repayment totaled $826.9m of which 94.7 percent was facilitated in Bahamian dollars.
As a result, the government’s net borrowings stood at $714.4m, which resulted in the direct charge (exclusive of exchange rate adjustments) growing from $7.527bn at end-June 2019 to $8.242bn at end of June 2020 taking debt-to-GDP to an estimated 68.4 percent from 60 percent a year earlier.
Vowing to curb this high debt to GDP ratio the Ministry of Finance says it is currently in the process of advancing both the Public Debt Management Bill (PDMB) and the Public Finance Management Bill (PFMB) for public consultation in early September.
The PDMB seeks to consolidate and amend existing laws for public debt management as well as implement a governance framework oversight of government debt activities which are to be guided by defined objectives. The Bill will also establish a debt management unit and a debt management committee and require the production of an annual debt management strategy report. The debt management report will be presented to Parliament at the time of the fiscal strategy report.
On the other hand, the PFMB seeks to replace the existing Financial Administration and Audit Act 2010. It is expected to clearly specify the roles and responsibilities of financial officers, enhance reporting requirements and accountability expectations across the public service, and solidify criminal penalties for malfeasance in public financial matters.
Further, the lingering effects of Dorian, the category five hurricane which struck Abaco and Grand Bahama last September, combined with the current state of things during COVID-19, pushed recurrent and capital expenditures by a combined $231.7m or 8.8 percent to $2.877bn. In the final quarter of the fiscal year, the government spent over $57.3m directly on COVID-19 related recurrent and capital expenditures. These items included $1.7m to support the COVID-19 response in the Family Islands; $1.2m to cover rental charges associated with government-funded quarantine sites, and over $4m to purchase medical supplies, including PPE, between the Ministry of Health and the Public Hospitals Authority. It also included $39m to support business continuity programmes for Bahamian small businesses.
Additionally on the recurrent expenditure side, subsidies to public non-financial corporations increased by $52.0m or 14.9 percent, as the government facilitated repatriation flights with the national airline, repairs to water mains, outlays to the Public Hospital Authority and the National Health Insurance Authority to assist with Hurricane Dorian relief and recovery efforts.
Compensation of employees expanded by $47.6m, including a growth in allowances of $17.0m or 28.7 percent primarily associated with increased outlays for staff that were either displaced by Hurricane Dorian or relocated to assist with recovery efforts. Spending on goods and services decreased
by $40.3m or 6.8 percent, largely due to the reduction in tourism related outlays such as several marketing subventions.
Comments
tribanon 3 years, 8 months ago
The 'national debt' + government's guarantee of the debt of essentially bankrupt government controlled corporations and special purpose vehicles (SPVs) + the unfunded vested pension benefits of government employees and officials = $13 billion of 'true unsustainable debt', and counting.
The Bahamas's true unsustainable debt of $13 billion equates to well over $100,000 for every productive worker in The Bahamas today who is lucky to still have a paying job.
Porcupine 3 years, 8 months ago
Almost a million dollars a day in interest alone. Think about that for a moment. With a populationof 400,000.
rodentos 3 years, 8 months ago
that's not even one coffee per day per head :D
Proguing 3 years, 8 months ago
"This places government debt at 68.4 percent of GDP". Looks like this does not include the 2020 shrinking of GDP.
Clamshell 3 years, 8 months ago
Regarding the national debt, the Bahamian nation should take the same approach most Bahamians take toward a debt: Just don’t pay it. 🤣🤣😎
tribanon 3 years, 8 months ago
We get nothing but typical sugar coating by the MOF of just how dire our country's financial predicament really is. Turnquest's deceitful playfulness with words and figures as minister of finance is intended to hide the harsh reality that our country is bankrupt and unable to sustain itself going forward without taking on even more debt. We are now dependent on the goodwill of international organizations controlled by other nations to continue lending us the hard currency amounts we desperately need in order to prevent us from being officially declared a failed state.
Porcupine 3 years, 8 months ago
You are right.
SP 3 years, 8 months ago
The national debt ballooning to $8.24bn for the fiscal year 2019/2020 in the fourth-quarter fiscal is a full-length feature movie series, not a "snapshot".
The Bahamas need to come to grips with and urgently put new innovative plans in place to address our ballooning debt in the most serious posture possible. This is no time for politricks, and playing political favorites.
EVERY REMOTELY ABLE HAND is needed front & center on deck, or we all go down!!
With the tourism product as our number one industry having been albeit totally ignored for the past 50 years and allowed to seriously regress by successive administrations, Covid19 has unquestionably forced this government to remove the blinders, sit up straight, and start paying undivided attention!
This government should be "nose to the grinder" at the table trying to identify as many ways possible for more tourists to increase spending in our country.
No more of the "give everything to foreigners" stupidity will work. Bahamians MUST become owners and operators of our top industries our we will find ourselves in this very same untenable position again, and again!
If Bahamians are initially unable to deliver world-class products, the government needs to acknowledge and accept that they themselves are the reason Bahamians may be deficient due to inexperience caused by DECADES of being left out of sharing the tourism pie.
Jamaica and the Dominican Republic had to overcome the very same deficiencies with their people producing food and tourism products. They both came from way, way, way, behind us, and surpassed the Bahamas in local food production and tourism products.
The only thing holding Bahamians and the Bahamas economic growth back was our own government that insisted on giving everything lock, stock, and barrel to foreigners and regulating Bahamians to workers instead of owners in our economy.
Thanks to the Covide19 pandemic, the chickens have now come home to roost and successive governments many, many, failures, and utter stupidity, are laid bare for all to FEEL AND EXAMINE!
Porcupine 3 years, 8 months ago
You are wrong on the point that the buck stops with the government. The people put these jackasses in there every 5 years. The people can complain all we want, but we knew exactly the moral fiber of those we voted for. We just thought some of those ill gotten gains would trickle down to us.
Clamshell 3 years, 8 months ago
No prob ... if every person in the country just chips in $20,000, we can pay it off by Friday. 😎
joeblow 3 years, 8 months ago
The problem is our government cannot be trusted with money, nor do they understand the concept of fiscal management! VAT was started for the sole purpose of paying down the national debt, but that never happened. By now government should have implemented a national lottery to aid social services, education and to assist in paying down the national debt as well (considering the social burden of gambling, the proceeds of gaming should not be flowing into the coffers of a few men). The problem is the more money they have, the more money will be wasted and misappropriated.
Porcupine 3 years, 8 months ago
Absolutely right.
bogart 3 years, 8 months ago
LIAT Airline , airline owned by some 7 caribbean countries just June liqiudating the airline because of increasing costs and Covid 19 economic challenges, BWIA, well known Trinidad and Tobago airline ceased, AIR JAMAICA airline ceased. GUYANA AIRWAYS became insolvent an ceased.These Caribbean airlines ceased because of debts. In order to cut decades long debts accumulating and accumulating...and perpetually seems more decades and decades more increasing debt ...it is time to liquidate BAHAMASAIR (and also other govt controlled entities losing money and unlikely to give good returns.) Dozens of other private business Airline operators can fill vacancy, likely more competitive rates and same or better Covid 19 passengers travelling.
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