The government expects to overshoot its fiscal deficit target for fiscal year 2019/2020 by $436 million because of the devastation caused by Hurricane Dorian, according to its early economic projections, Deputy Prime Minister and Minister of Finance Peter Turnquest said yesterday.
Turnquest, who presented the preliminary numbers during his contribution in the House of Assembly yesterday, said the fiscal deficit is likely to be $573 million, or 4.5 percent of gross domestic product (GDP).
The government, given the terms of its Fiscal Responsibility Act, was shooting for a deficit target of one percent of GDP, or $137 million, according to Turnquest.
Dorian, which devastated parts of Grand Bahama and the Abacos, has robbed the government of a possible 13.7 percent of total revenue collection, as estimated by collections from fiscal year 2018/2019.
“Proportionally, this may seem small, however, this contribution has always been an important component for delivering on the government’s overall budgetary projections,” Turnquest said.
He added that the Ministry of Finance has projected a revenue shortfall of almost $215 million, or eight percent of the total projected revenue for this fiscal year because of the storm.
He also explained that the government will have to spend an additional $222.4 million, split between recurrent spending, $80.9 million; and capital expenditure, $141.5 million.
“These funds will primarily be used for rebuilding critical infrastructure on Abaco and Grand Bahama, including electricity and water services, the reconstruction of affected medical facilities, the construction of temporary housing and the delivery of targeted government services and assistance to affected populations,” said Turnquest.
The government’s fiscal deficit overshoot due to Hurricane Dorian has forced the government to enact measures required by the Fiscal Responsibility Act to publicly explain its reasons for missing its deficit targets and how it will realign the country’s economic footing.
Turnquest explained, “Given this deviation, the government is required to devise and present a fiscal adjustment plan outlining three components: the reasons for the departure from the fiscal target; the measures the government intends to take to get back on track; and an estimate of how long it will take to do so.
“As required by the act, we intend to provide such a plan to both the Parliament and the Fiscal Responsibility Council in November as part of the upcoming 2019 Fiscal Strategy Report. We will also present a supplementary Hurricane Dorian budget that will outline the adjusted revenue and spending positions, alongside a request for the additional borrowing authorizations.”