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Auditor General set to probe COVID spending

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The government has pledged that the Auditor-General will probe all COVID-19 related spending and revenue losses in bid to uncover any “irregularities”, the International Monetary Fund (IMF) revealed.

The fund, in its newly-released full Article IV report on The Bahamas, said this effort - which will see the Auditor-General complete his investigation of pandemic-related actions taken in the prior 2019-2020 fiscal year by March 2021 - was key to fostering public trust in the government and ensuring value-for-money was obtained for every dollar spent.

“Transparency and accountability of the emergency expenditure measures are key to facilitate verification and audit,” the IMF urged. “The authorities are committed to publishing procurement contracts of COVID-19 related spending with beneficial ownership information on their website in the coming months, and have started collecting the necessary information from the line ministries.

“The auditor-general will audit the fiscal year 2019-2020 COVID-19 related expenses and revenue losses by March 2021. The auditor-general will report on any irregularities and abuse, and can recommend legal proceedings. Such efforts strengthen the public’s confidence in the government and ensure that spending is of high quality.”

Oversight over the government’s COVID-19 spending, and awarding of pandemic-related contracts, became a hotly-contested issue in the House of Assembly on Wednesday after Philip Davis, the opposition leader, accused the prime minister of breaching the emergency powers orders.

The basis for this assertion was that the Government has failed to submit a report to Parliament that details the “expenditures, suppliers for the goods and services procured, and the reasons those suppliers were chosen”.

Mr Davis charged to Dr Hubert Minnis: “Which expenditures and which suppliers are so controversial that he cannot disclose them to the public, as he is so required? Perhaps we shouldn’t be surprised. Every promise ever made to the Bahamian people about accountability is sitting in the dustbin.

“Twice the proclamation of emergency has expired – at the end of June and in November - and neither time did you comply with that requirement. Neither time. You are in breach of the law, sir. Why? What do you not want the Bahamian people to know about how you are operating behind closed doors?”

Away from the politics, the IMF said the Bahamian commercial banking industry could withstand up to a 15 percentage point increase in non-performing loans as a result of the COVID-19 pandemic.

However, the picture was not the same on credit unions. “Some banks (representing about one-quarter of system wide assets) could experience modest capital shortfalls,” the Fund added. “Some of the credit unions, which represent about 3 percent of total banking system assets, are heavily exposed to the tourism sector and may need to be resolved.

“Staff urged the Central Bank to intensify oversight and ensure timely intervention. Once the crisis recedes, the Central Bank should engage with banks to facilitate the effective work-out of non-performing loans so that they do not drag down credit growth.

“Loan moratoria, where considered useful for households and firms to weather liquidity shocks, should be targeted to those borrowers affected by the pandemic and phased out as the pandemic recedes to promote transparency and sound risk management, and prevent moral hazard,” the IMF continued.

“The Central Bank should provide guidance so banks’ estimates of expected credit losses are robust and timely, and ask for regular loan portfolio reviews and risk assessments by banks.”

The IMF said it will “take years” for the deposit insurance protection fund to reach its $125m target, having warned the Central Bank about including credit unions under this safety net before they were fully capitalised.

“The Protection of Depositors (Amendment) Act 2020 enhances the Deposit Insurance Fund’s (DIF) governance, reduces the time within which it must make payouts, and provides access to credit unions,” the Fund’s report said.

“Effective implementation of these reforms will require adequate staffing at the Central Bank and the DIF. While annual DIF premiums doubled to 0.1 percent of insured deposits, it will still take years to reach the 2019 recommended target ratio of 2 percent of insured deposits (about $125m) given that the Fund only contained about $60m in 2020.”

Comments

John 3 years, 4 months ago

Corona cases worldwide have plummeted to their lowest levels since August 2020, and continue to plunge. Even cases in parts of the United States have fallen by over 30%, the greatest decline since the pandemic began. And note this is before the vaccines that were already administered become effective or even before the second dose is administered. Is this why there is a mad rush now to vaccinate? Is this why one vaccine manufacturer is claiming their vaccine is 99.3% effective? This entire corona pandemic needs to be investigated to determine who perpetrated this unforgivable atrocity against humanity and their motives.

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