Deputy Prime Minister Peter Turnquest.
By KHRISNA RUSSELL
Deputy Chief Reporter
krussell@tribunemedia.net
FINANCE Minister Peter Turnquest defended government’s intention to borrow $587.9m post Hurricane Dorian, insisting the Minnis administration had the “appropriate response” to rebuilding the affected islands and revitalising the economy.
In Parliament’s first sitting of the year, Mr Turnquest tabled two separate resolutions – one seeking House approval for a $587.9m loan from the Inter-American Development Bank and another for $50m from the Caribbean Development Bank. The latter is included in the overall loan and is apart of several means by which government expects to raise the money needed.
The East Grand Bahama MP said although the damage of deadly Hurricane Dorian was concentrated on Abaco and Grand Bahama, there had been broader socio-economic severity, which rattled the very core of the nation.
In the months following the storm, government has had to figure out how to deal with revenue loss and expenditure increases, resulting in a projected deficit increase of approximately $677.5m or 5.3 percent of GDP.
This, the deputy prime minister said, exceeds the approved budget target of $137m, and therefore has corresponding implications for the financing envelope.
However, he said government would work hard to contain discretionary spending to avoid undue pressure on the country’s fiscal position, adding every effort would be made to perform at a number below the $677 deficit projection.
Government announced last November plans to borrow funds because of a ballooning deficit and revenue reduced by $232.6m. The need was due to revenue loss and money foregone from value added tax, business licence fees, customs and a number of other taxes in the hurricane-affected islands.
“I wish to reiterate that the blow this hurricane has dealt us is unprecedented in the history of our nation. While all of us wish we could have faced a different set of circumstances, we must remind ourselves of an all too familiar and relevant saying: ‘It’s not what happens to you but how you respond to it that matters,’” Mr Turnquest told parliamentarians yesterday.
“None of us had any control over the tragedy that befell the people of Abaco and Grand Bahama, or the country as a whole on that ill-fated day in September. However, as a government, we can ensure that we have the appropriate response.
“This administration will do all that is within its power to restore Abaco and Grand Bahama, while we continue on the path to restructure and revitalise our economy. It will require a tremendous amount of planning, resources and time to restore what Dorian has taken from us. However, we will do whatever it takes to support and care for those who are rebuilding their lives and to be good stewards of the country, as we weather this tenuous social and economic disruption.”
To cover the costs associated with the hurricane, and the spending imperatives previously outlined, the government will now require new financing in the sum of some $507.9m.
The government intends to raise these funds through a $100m IDB contingent credit line – of which $80m is likely to be drawn down; a $50m loan from the CDB; up to $200m in a club loan from a consortium of domestic bank lenders; and the remaining $177.9m is to be sourced by way of other instruments.
“These sources which I have identified will be supplemented with $20m from the Dormant Accounts Fund and the $12.8m payout from the Caribbean Catastrophe Risk Insurance Facility which, together with the $507.9m in borrowings, will cover the $540.7m required in new financing.”
Despite the country’s fiscal position, Mr Turnquest said government takes comfort in knowing that medium-term prospects remained strong.
“Major capital projects are still on stream, including the airport development projects in the Family Islands. Foreign direct investment inflows remain steady with development projects moving forward in New Providence, Harbour Island, Eleuthera and across the archipelago. Reconstruction is kicking into high gear in Abaco and Grand Bahama, while employment in both islands is starting to pick up. Employment in the constructions sector in particular is providing a much needed boost,” he added.
“Yes, we have had to adjust our fiscal targets, and yes, we have had to increase our borrowing to respond to the fiscal pressures, but this presentation today, and our tabling of a supplementary budget, is proof that this government does not operate with its head buried in the sand. We make practical and responsible decisions, and do so in the light of full public scrutiny.
“As I have emphasised before, we will work hard to contain discretionary expenditure so that we do not place undue pressure on our fiscal position.
“Notwithstanding the new deficit and debt positions being projected as a result of Dorian and its economic fallout, the Ministry of Finance will remain vigilant and will work hard to come in at a number below the $677m deficit currently being projected. In other words, while the government has been and will continue to fully fund the recovery efforts, this unfortunate event will not be used as a pretext to go on unnecessary spending binges. This government will remain committed to the principle of sound fiscal principles,” Mr Turnquest said yesterday.
Comments
bahamianson 4 years, 2 months ago
WE ARE ALWAYS ON THE BRINK BECAUSE WE SPEND SO MUCH. JUST BECAUSE YOU MAY HAVE EXTRA MONEY DOESN'T MEAN YOU SHOULD SPEND IT. WE ALWAYS HAVE TO BORROW BECAUSE WE CANT DO ANY BETTER. SUCK TEET!
momoyama 4 years, 2 months ago
You seem to suffer from the same error as both parties, ESPECIALLY the FNM, who see only one side of the equation: spending. What about revenues? It is a laughably ignorant statement to say that the Bahamas "spends too much" and it displays a total lack of acquaintance to the most easily available facts.
The Bahamas spends around 19 percent of its GDP annually. That is among the lowest on earth. The regional average is 35 percent, the European average is 50 percent and the USA is 43 percent. The problem is that it only COLLECTS 17 PERCENT of GDP!!!!
Why? Because we undertax foreign investors, totally fail to tax the rich (through graduated income taxes) and do not even bother to collect the pitifully small percentage that we tax foreign landowners in the family islands (where Bahamians are, rightfully, exempt).
Instead, we pile all of our taxes on the poor and middle class, who bear a disproportionate burden of taxes on consumption (since a larger portion of their income goes to consumption). This also slows down the economy, since the poor spend more on things that keep the economy going.
In other words, we have a regressive tax system and this idiot is retarded in thinking that we should be borrowing more than simply fixing it and doing what everyone else does: PROGRESSIVE TAXES.
Chucky 4 years, 2 months ago
Damage to government assets shouldn’t be much assuming they carried insurance, lol.
So most of this borrowing to to make up for lost revenue. Lol
One thing that is certain, when you elect a government it is based on the party platform / campaign promises etc. Yet once in power the government does all sorts of things that we don’t want them to do. If they told you in advance what they would actually do, they would never get elected.
It’s no coincidence that campaigns are always fought over trivial matters , leaving the door wide open to all kinda misbehaving for whatever party gets in power.
We need recall powers , or they will force the masses to storm parliament and force change either peacefully or otherwise.
There can be nothing illegal about the people exercising their will, regardless of method; wether by democracy or for e, it’s the people’s will, so it’s intrinsically good.
Well_mudda_take_sic 4 years, 2 months ago
If the IDB told K P Turnquest to fart he would all too quickly and most happily do so.
The bureaucrats at the IDB now have full control of the governance of our country and they are hell bent on turning the vast majority of Bahamians into debt slaves. The IDB's unabashed and disgraceful mission has along been to put our nation in debt bondage. This is achieved by putting their lending teat ("tit") to the constantly sucking lips of incompetent elected officials who are known to be susceptible to engaging in corrupt activities for their unjust enrichment, i.e. corrupt politicians who all too willing to sellout their fellow countrymen.
The IDB's lending teat ("tit") serves to fulfil the mandate set by the foreign interests who are behind the developed countries that financially back the IDB - predominantly the U.S.A. These foreign interests wish to acquire our most valuable national assets at fire sale prices, but can only do so by destabilizing our finances in order to seize and maintain control of all key aspects of our economy. And that's where the IDB comes into play. Their mission is to exploit (even encourage) the propensity of our corrupt government officials to take on unsustainable levels of debt that results in most Bahamians becoming debt slaves with no end to their indentured servitude. That's the harsh reality of what's going on here. It's the principal reason why none of our elected PLP or FNM governments have been willing to introduce serious austerity (belt-tightening) measures aimed at reducing the unsustainable costly size of our grossly over-bloated civil workforce, among other things.
DDK 4 years, 2 months ago
Exactly right, Mudda
Well_mudda_take_sic 4 years, 2 months ago
And no sooner will the weak and most incompetent KP Turnquest add this motherload of additional borrowing to our already unsustainable national debt, than we will see headlines in the local newspapers that read:
"National Debt Level Leaves No Option To Huge Increase in VAT"
And of course K P Turnquest will once again be telling us his hands are tied when it comes to yet another hugh increase in VAT ...... and round and round we go because he values being a member of the political elite more than he does our country's financial well-being. The same applies to Minnis. These weak, incompetent and corrupt buffoons don't give a rat's arse about turning the rest of us and our children, grandchildren, great grandchildren and so on into debt slaves.
DDK 4 years, 2 months ago
All too predictable 😀
Well_mudda_take_sic 4 years, 2 months ago
And not even a peep out of K P Turnquest's mouth to say what government plans on doing to address the ever rising costs associated with the invasion of our country by overwhelming numbers of illegal Haitian aliens. Is he proposing to simply borrow more money to fund the horrific costs of accommodating these illegal Haitian aliens in our country, presumably at the urging of the IDB?
Where is the sanity in all of this? Why are we not weekly shipping hundreds and hundreds of these illegal Haitian aliens back to Haiti, recognizing that borrowing money to accommodate their education, healthcare and other needs while here in our country will never be a financially viable option.
Dawes 4 years, 2 months ago
LOL man they going to milk Dorian for a long time. Yes Dorian has caused you to borrow a lot more, but it didn't cause you to borrow. You were going to do that no matter what happened. As such it wasn't Dorian that caused you to borrow but your mismanagement of the economy and lack of balls to make hard decisions.
TalRussell 4 years, 2 months ago
Heave a sigh of relief that KP - doesn't have borrow lots more - due the kind generosity foreigner comrades - who suddenly out blue - flew into colony's capital - where they held successful fundraiser - where in excess $1.5 Billion was pledged to support post Hurricane Dorian reconstruction efforts for the Out Islands the Abaco's and Grand Bahamaland. Can't write this, just, **can't but hope that PopoulouOrdinary - are intelligent enough - recognise - exactly what constitutes a pledged donation - and what - doesn't?
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