Progressive Liberal Party (PLP) Deputy Leader Chester Cooper charged yesterday that the precarious fiscal situation facing The Bahamas has less to do with Hurricane Dorian and COVID-19, but “represents the cumulative impact of a series of bad fiscal decisions over the past three previous budgets”.
“In less than three years, they borrowed more than $3 billion gross and close to $1.5 billion net with nothing to show,” said Cooper, in response to the 2020/2021 budget communication in the House of Assembly.
“Bahamians are still asking what in the world they did with all that money.
“The self-proclaimed master deficit manager, minister of finance, has now brought us the biggest deficit and debt level in our history.
“The borrowing this administration has undertaken has been of no material use to this country thus far.
“The lack of financial flexibility brought about by this administration’s failed revenue and expenditure strategy is why we see such floundering in response to Hurricane Dorian and COVID-19.
“This administration’s poor handling of the economic side of this COVID-19 crisis has made things worse than they ought to have been.”
Cooper, the shadow minister of finance, added, “As expected, we heard a cocktail of blames: blame the PLP, blame Hurricane Dorian and blame COVID-19.”
He declared, “Had this administration not exacted such misery on the Bahamian people under the guise of fiscal responsibility, and instead focused on job creation and economic growth, we would be better prepared to deal with the COVID-19 crisis and its aftermath.”
During his budget communication, Minister of Finance Peter Turnquest said the economic fallout associated with the twin events of the COVID-19 pandemic and Hurricane Dorian has resulted in a projected deficit of $1.3 billion for 2020/2021.
Turnquest estimated only $1.7 billion in revenue in the next fiscal year, $900 million less than the total revenue for the 2018/2019 budget year.
Earlier this week, the government announced that it applied for a $252 million low-cost, rapid financing facility from the International Monetary Fund (IMF).
While it was emphasized that the loan has no strings attached, Cooper projected that The Bahamas will be forced to enter a structural adjustment program with the IMF by the next election.
“We warned the government to leave some borrowing headroom and a rainy-day fund, but they did not; hence, another downgrade of our sovereign credit rating,” he said.
“And now, we find ourselves in the embrace of the International Monetary Fund.
“We are hat in hand having to accept its ‘no strings attached offer’.
“And this is usually where it begins. We predict The Bahamas will have to enter into a structured lending program that will happen before this administration is voted out of office in 2022.”
Cooper accused the Minnis administration of making serious financial decisions in the absence of a thorough plan.
“The disbandment of the revenue task force and an ill-advised VAT increase led to multiple failed revenue targets and the most rapid increase in borrowing in history, without a plan, without a strategy that resulted in nothing to show,” he said.