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National Debt Near $10bn At 2020 End

Central Bank of the Bahamas.

Central Bank of the Bahamas.

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ national debt was just shy of $10bn at year-end 2020, the Central Bank revealed yesterday, having increased by $1.4bn during the previous 12 months.

The figures, disclosed in the regulator’s economic review for the 2020 fourth quarter, provide further insight into the debt and deficit blow-out produced by the combination of COVID-19 and Hurricane Dorian plus the ever-increasing strain being placed on Bahamian taxpayers to service this burden.

The report revealed that the government’s debt increased by more than half a billion dollars in the 2020 final quarter, due to the collapse in its revenues and increased social spending to mitigate the pandemic’s worst effects, with total liabilities finishing the year just $143.3m below the $10bn mark.

“The national debt - inclusive of contingent liabilities - rose by $510.4m (5.5 percent) over the three-month period, and by $1.399bn (16.5 percent) on an annual basis to $9.857bn at end-2020,” the Central Bank revealed.

“As a ratio to GDP, the direct charge increased by an estimated 12.4 percentage points on a yearly basis to 69.4 percent at end-December. The variation also reflected an estimated significant contraction in the denominator, the GDP, for 2020. In addition, the national debt-to-GDP ratio increased to an estimated 72.6 percent compared to 62.3 percent in 2019.”

The scale of the deterioration in the Government’s finances and key ratios is not surprising given the deep economic contraction sparked by COVID-19, but it illustrates just how much work is now required to stabilise the fiscal position and get it back on track with the targets established by the Fiscal Responsibility Act.

“Budgetary financing for the second quarter of the 2020-2021 fiscal year was dominated by external borrowings, which totalled $886.5m, inclusive of issues of international bonds proceeds of $825m and $61.5m in project and policy-based loans,” the Central Bank said. 

“Further, $307.6m was obtained from domestic sources in the form of bonds ($191.4m); loans and advances ($94.9m) and net Treasury bills/notes ($21.3m). Debt repayment for the period totaled $692.3m, of which the largest share (63.3 percent) went towards retiring Bahamian dollar debt.

“As a consequence of these developments, the direct charge on the Government grew by $513.9m (5.8 percent) over the previous quarter, and by $1.685bn (21.8 percent) year-on-year to $9.418bn,” the Central Bank added. “A breakdown by component showed that Bahamian dollar obligations constituted 55.3 percent of the total, while foreign currency liabilities accounted for the remaining 44.7 percent.

“A further disaggregation by creditor revealed that private and institutional investors held the largest portion of local currency debt (41.6 percent), followed by banks (42.4 percent), public corporations (11.1 percent) and the Central Bank (4.9 percent).

“A breakdown by instrument type showed that Government bonds comprised the largest share of domestic currency debt, at 73.2 percent, and featured an average maturity of 10.5 years, compared to 9.8 years in 2019. In addition, Treasury bills and loans and advances accounted for smaller shares of 17.7 percent and 9.1 percent, respectively.”

The Government’s contingent liabilities, meaning debt it has guaranteed on behalf of the public corporations, fell by $285.3m or 39.4 percent year-on-year to $438.7m due to the refinancing of legacy Bahamas Electricity Corporation (BEC) debt.

As for the country’s foreign currency debt, the Central Bank added that this rose by $635.2m (15.3 percent) to $4.784bn during the 2020 fourth quarter. “In comparison to the same quarter of 2019, total foreign currency debt service payments rose sharply to $340.5m from $79.7m, attributed in large part to a $248m refinancing of Government’s short-term external debt obligations,” it said.

“Net of the refinancing, the comparable serving was still expanded at $92.5m. Underlying this outturn, the Government’s debt service payment increased to $321.5m from $58.1m last year, as amortisation payments advanced to $254.3m and interest charges moved higher by $16.8m to $67.2m.

“In contrast, the public corporations’ segment decreased by $2.6m (11.8 percent) to $19.1m, with interest charges lessening by $5m (35.7 percent) to $9.1m, outstripping the $2.5m (33.3 percent) rise in amortisation payments to $10m.

“Exclusive of refinancing activities, the Government’s debt service to revenue ratio stood at 18.3 percent at end-December, an increase of 7.6 percentage points over the previous year, while the debt service ratio rose to 41.8 percent from 8.4 percent in 2019.”

Comments

tribanon 10 months, 1 week ago

There's a whole lot I could say here, but why bother......it's all too late for us thanks in great part to the failed leadership of our grossly incompetent PM.

The unstoppable worst will soon be upon us and living a most miserable existence in a failed state will be the new normal for the vast majority of Bahamians.

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TalRussell 10 months, 1 week ago

More like $15 Billion before 2021's thrust for buying votes via propping up the paycheques of thousands of unneeded government workers, along with the competent authority's reckless hiring and bad bookkeepin' expires.
Comrades, we're not talkin millions but Billions with a capital B.
Doubtful taxes and fees collected by the PopoulcesPurse will sustain escalating carrying costs.
*Yep, the next years goin' give a whole new definition to walkin' away as far as you can to escape mountin' Bad Debt! We are in for a 30-year cycle of an upsidedown global economy.
Goin' need build extension to Fox Hill complex to accommodate a new and expanded, Her Majesty's Debtors Prison.

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bogart 10 months, 1 week ago

...er...need not to build and expand Fox Hill Prison for Debtors. The upsidedown world is that the Prison would be privilaged for regular meals etc., while the outside population have to beg for bowls of gruel long lines, water bills gone up water cannot be paid and looks time for the outhouse or historic metal potty inside house at night, lights off no jobs no money no electricity 24 hrs lights off, confined curfew stresses on the outside etcetc. Seems that prison is not inside Fox Hill Prison, seems Prison is on the outside with population tortured prisoners of events.

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sheeprunner12 10 months, 1 week ago

True Tal .............. Must add at least another $3 Billion to take into account Govtworkers/retirees' pensions .......... and SOE guaranteed loans (Bahamasair, BPL, ZNS, WSC etc) ........... and uncollected taxes & IOUs from SPVs

Our Government Budget accounting system hides a lot of debt from the public records

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bcitizen 10 months, 1 week ago

Lets form a new department under the Ministry of Finance called Department of National Debt Services and let them study this problem. They will need a budget of 20 million and at least 100 new government workers and some national debt response vehicles to drive around in,.

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tribanon 10 months, 1 week ago

Pleeezzzz.....don't plant any such silly ideas in Dumbo Minnis's head. He's so damn thick-headed he might just do what you cynically suggest.

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KapunkleUp 10 months ago

$20 million... that hardly covers insurance, lunches and mandatory vacations.

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yeahyasee 10 months ago

LOL and they need benefits as well insurance/pension

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WETHEPEOPLE 10 months, 1 week ago

The cost of living in the bahamas is too high given the standard of living isnt higher than most other carribean countries who pay alot less for utilities and services

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FreeUs242 10 months, 1 week ago

No jobs...they talking all bs with no jobs throughout the Bahamas. When will they create jobs for Bahamians...

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tribanon 10 months ago

"Never" is the short answer.

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FreeUs242 10 months ago

Why do Bahamians vote for these 🤢 ppl. They will just continue to mess things up and sell the entire Bahamas. They received a vaccine that is being cancelled around the world because they will take anything that comes to them (Vaccines).

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KapunkleUp 10 months ago

I honestly doubt the government (any government) has ever created jobs aside from their own public employees. All governments (past and present) have always relied on foreign companies coming to us and building hotels.

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KapunkleUp 10 months ago

So that translates to about $25,600 debt for EVERY SINGLE BAHAMIAN. Might be a good time to marry a foreigner and leave before the poop hits the fan.

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sheeprunner12 10 months ago

We have a narrow and low tax base ......... About 16% of GDP is collected as taxes in The Bahamas as compared to Jamaica with 27% .......... Words from the mouth of MOS-Finance (Kwasi) .......... He is correct, and we don't seem to want to change our regressive tax system.

So, we collect little, dont collect much what is on the books AND borrow a whole lot .......... Now that the tourist dollars are not coming, we are in serious financial trouble.

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