Hurricane Dorian Extraordinary, Unexpected Fiscal Impact causes Bahamas Govt to present Supplementary Budget – Magnetic Media

#NASSAU, Bahamas — January 30, 2020 — Deputy Prime Minister and Minister of Finance the Hon. K. Peter Turnquest explained that the Government is presenting the extraordinary and unexpected fiscal impact of Hurricane Dorian as a Supplementary Budget, so that the Bahamian people are made fully aware of exactly how the Government intends to address the challenges which have emerged.

As he presented the Supplementary Budget Statement in the House of
Assembly, Wednesday, January 29, 2020, DPM Turnquest stated that the
supplementary appropriations outline both the expected revenue losses arising
from the Hurricane together with the increases in the recurrent and capital
expenditure allocations necessary to deal with the emerging restoration and
rebuilding activities on the islands of Abaco and Grand Bahama.

Peter Turquest, Bahamas Deputy Prime Minister, Minister of Finance

“The Supplementary
Budget Book provided to this Honourable House presents the expected revenue
loss for this fiscal year, by the respective revenue categories, which underlay
the adjusted revenue budget for FY2019/20; it details the additional capital
and recurrent expenditure arising from Hurricane Dorian, as well as several
other policy imperatives.  As these
impacts are multi-year, the medium-term forecasts have been extended by one
year and revised through to FY2022/23.”

He noted that in
circumstances like this facing substantial revenue loss and significant new
expenditure requirements, governments are compelled either to raise additional
funds through greater taxation – or through increased borrowing in the near
term.   “The Government has determined
that additional taxes would not be optimal at this time, given the substantial
impact of Dorian to our economy and the need to maintain private consumption
levels.   Accordingly—and very
conscientiously—the government has decided to fund the revenue loss and
expenditure requirements through additional borrowings. 

“Thus, I am also
tabling a new borrowing resolution for authorization to borrow beyond the $72.4
million (which excludes the $628.0 million for refinancing of maturing debt) approved
at the time of the 2019/20 Budget Communication in May of last year.”


He said, “As I
mentioned during the tabling of the 2019 Fiscal Strategy Report in November, we
anticipate that total revenue for FY2019/20 will now be reduced by $232.6
million, due to revenue losses and revenue foregone from VAT, Business Licence
fees, Customs, and a number of other taxes in the Hurricane-affected islands.”

DPM Turnquest stated
that it is important to remind the House that given the magnitude of the impact
of Dorian on the islands of Abaco and Grand Bahama, the Government unveiled an
unprecedented package of tax incentives and concessions as a key part of the
establishment of the Special Economic Recovery Zone (SERZ).  I know that members opposite agree—like all
Bahamians—that this was and is the right thing to do.  

“However the impact of
those much needed tax concessions for those island mean that over $200 million
in tax revenues is being deliberately and consciously foregone.  This is being done so that the government is
doing as much as it reasonably can to aid the speedy recovery and restoration
of those impacted communities. 

“Thus, at year-end, we
project a revised aggregate revenue of some $2,395.6 million in FY2019/20, as
opposed to the $2,628.2 estimated at the time of the annual budget exercise.”

He added that given the
total incremental spending that the Government will have to undertake to
initiate rebuilding and restoration efforts, we anticipate that total
expenditure will increase to $3,073.1 million for FY2019/20, in comparison to
the $2,765.0 initially budgeted and approved. 

Abaco post Hurricane Dorian

The DPM explained that
recurrent expenses are projected to be higher by $157.6 million, bringing the
revised estimates to $2,687.6 million. 
Of this total, approximately $82.7 million is associated with Hurricane
Dorian, which include:

  • $23.1 million in costs
    associated with clean-up activities,
  • $12.9 million to
    facilitate food and accommodation assistance programmes,
  • $11.4 million to fund
    the extension of the unemployment benefit to eligible persons,
  • $11.1 million in
    allowances for affected public staff,
  • $5.4 million for the
    acquisition of supplies and materials,
  • a $1.5 million
    allocation to the new Ministry of Disaster Preparedness, Management and
    Reconstruction, and,
  • the remaining $17.3
    million allocated to primarily cover contingencies, consultancy services,
    security and other costs.

He said, “This spending has and will facilitate a number of social assistance measures on the Government’s part.  For example, the Government has aided with rental assistance to evacuees from both Grand Bahama and Abaco, provided accommodations to hurricane victims by way of shelters, food assistance to victims outside of the shelters, and has also extended its national lunch benefit to displaced students that relocated to schools in New Providence. In addition, the Government is seeking to expand the National Insurance Board (NIB) unemployment benefit to 26 weeks from 13 weeks to eligible persons that have been impacted by the storm.”

BIS STORY By Llonella Gilbert

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