By Youri Kemp and Neil Hartnell
The deputy prime minister yesterday revealed August’s economic shutdown dropped government revenues 23 percent below projections as he warned the country “cannot afford” further lockdowns.
K Peter Turnquest, pictured, told the House of Assembly that the Public Treasury’s income for the first two months of the 2020-2021 fiscal year was equal to 77 percent of what had been forecast after much of the economy was closed in August in a bid to halt COVID-19’s further spread.
Giving an update on the government’s fiscal and economic plans, he warned that any further pandemic-related lockdowns would cause “significant and painful adjustments” to the fiscal forecasts.
And he acknowledged that the Ministry of Finance’s planners would face “a more troublesome scenario” come year-end if the tourism industry’s re-opening from October 15 onwards fails to produce the “jump start” that the industry and wider economy so badly need.
Mr Turnquest promised to give a further update next month when then impact of tourism’s re-opening, and traveller demand for a Bahamian vacation, were clearer. COVID-19 infection rates and trends in this country’s major source markets, as well as in The Bahamas, will also be vital.
And, conceding that there was “no magic wand to reconcile” the sometimes competing health and economic objectives amid the COVID-19 pandemic, the deputy prime minister urged all Bahamians to play their part in controlling the virus’ spread as “no one wants to live in or travel to a COVID-19 hotspot”.
“Although partial and complete lockdowns and curfews are effective in flattening the curve of the pandemic, and have been a necessary response in the interest of saving lives, early performance indicators for July and August clearly demonstrate their significant dampening effect on revenue receipts,” Mr Turnquest said.
“For the first two months of the fiscal year, total revenue came in at approximately 77 percent of the budget projection for the related period, largely reflecting the slowdown in economic activity in August, as a result of the lockdown.”
He added that government spending was also slightly higher than forecast as the full range of government welfare initiatives kicked-in, including unemployment benefits, food assistance and business support.
All this adds up to a higher than-projected fiscal deficit for the first two months of the 2020-2021 fiscal year, but Marlon Johnson, the Ministry of Finance’s acting financial secretary, told Tribune Business that no dollar figures are being provided because the Government’s cash-based accounting means reconciliations are still being carried.
Mr Turnquest, meanwhile, said the 2020-2021 Budget has always been based on expectations that there would been little to no activity during the 2020-2021 fiscal year’s first quarter, with then industry only seeing signs of life in October/November - a scenario that now appears to be playing out.
“The necessary but protracted shutdown in August had a significant impact on the business community and has caused some deviation to our initial revenue forecasts for that month. Further, a failure to jump start tourism before the end of the year would likely result in a more troublesome scenario,” he added.
Voicing hope that tourism will be able to re-open safely, and that there is “pent-up demand”, Mr Turnquest conceded: “There is no denying, however, that what happens in the global and domestic economy over the next few months will have a significant impact on the way forward and on the possible adjustments the Government may have to contemplate.....
“As a country, we cannot readily afford more protracted lockdowns without significant and painful adjustments to the Government’s fiscal plan..... Public anxiety about the economic crisis is real and valid; however, if lives are at stake, public health priorities must take precedence.
“If our cases continue to increase that, too, will dampen consumer demand, participation in the economy and curtail any visitor arrivals. No one wants to live in or travel to a COVID-19 hotspot, particularly one that is offshore with medical facilities that are already taxed by local demand,” he reiterated.
“Unfortunately, there is no magic wand to reconcile the public health and the economic welfare objectives amid a global pandemic. We must tackle and achieve success on both fronts by working together.”
Mr Turnquest’s address yesterday contained little that was new, and represented more a summary of the Ministry of Finance’s progress to-date, something that was not lost on his Opposition shadow.
Chester Cooper, the Progressive Liberal Party’s (PLP) deputy leader and finance spokesman, said: “The minister of finance’s report to the House of Assembly on the country’s fiscal affairs today provided no new information.
“As governmental social assistance programmes have weeks left before they run out, and people are anxious about losing that little help, the minister says he’ll maybe say something about this at a later date. As small and medium-sized business owners who were forced to shut down in July and August are still reeling, there was not much additional hope offered for them either.”