Unmarked path to resiliency
“We will transform this crisis into an opportunity for our economic and national revival,” declared Finance Minister Peter Turnquest as he presented the government’s 2020/2021 fiscal budget dubbed “unprecedented” for the nation’s inarguably unprecedented times.
But the budget, while allocating significant and necessary sums for social, unemployment and business support in the wake of COVID-19, offered precious little on how the Minnis administration plans to move the country from life support via the public purse, to economic revival from a projected 12 percent contraction in gross domestic product (GDP).
Even under a heralded period of growth over the past three fiscal years, the country’s annual rate of GDP growth came in at an average of 1.6 percent, well below what would be needed to realize an appreciable and sustained dip in nationwide unemployment, whose current rate has been conjectured at anywhere between a staggering 30 to 50 percent.
Over the next three budget cycles to FY 2022/2023, the country is projected to see its highest recorded debt to GDP ratio levels (82.8; 85.6 and 83.1 percent respectively); an unsustainable position that not only makes economic revival painstakingly urgent, but leaves The Bahamas with severely diminished headroom for borrowing.
With approval sought for an initial $1.33 billion in borrowing and a $2.07 billion borrowing envelope requested for the upcoming fiscal year, the layout of a comprehensive strategy to re-establish traditional revenue streams and establish new avenues of economic activity is what many Bahamians were eager to hear in yesterday’s budget communication.
University of the West Indies researchers have declared COVID-19 to be contained in the English-speaking Caribbean and The Bahamas is eyeing a July 1 reopening of its external borders, but when substantial rebounds in tourism arrivals and inflows can be expected remains to be seen, as international tourism is expected to decline by 60 to 80 percent this year, according to the World Tourism Organization.
Carnival and Royal Caribbean cruise lines anticipate an August 1 return to sailings, though noticeably absent from yesterday’s communication was an indication of when the latter will close on its multimillion-dollar resort and port redevelopment deal for Grand Bahama; a deal originally slated to be finalized by next month.
Laudable tariff reductions are pegged for the import of agriculture and fisheries equipment, while significant allocation cuts are reported for subventions and agencies including the Bahamas Agricultural and Industrial Corporation (BAIC) and the School of Agriculture and Marine Science in Andros, raising questions about plans for revenue enhancement, education and training in the sector.
No signal was given on whether government intends to expand agricultural pursuits into the multibillion-dollar medicinal marijuana industry as a new revenue stream.
Government expects revenue in the upcoming fiscal year to be $633 million lower than its revised mid-year revenue estimates for the current period and though there is precedent for its proposed public sector wage freeze in response to economic crisis, what goes against precedent set both in 1992 and in 2010 is the Minnis administration’s decision to save Cabinet ministers and parliamentarians from a salary cut.
That the Cabinet has refused to lead the way in financial sacrifice, even as it expects public and private sector workers to patiently bear the cross of economic upheaval, is a testament to what yesterday’s budget saliently lacked – evidence of the kind of leadership and vision necessary to bring the nation and its economy to a point of true resiliency.
This is particularly in light of planned multimillion-dollar subvention cuts for state-owned enterprises (SOEs), which could, among other consequences, result in job cuts at those entities.
Though a hiring freeze has been foreshadowed, the budget posts sizable allocation increases for contract workers; $3 million to the Ministry of Public Service and National Insurance; $740,000 to the Office of the Prime Minister (OPM); and a $180,000 increase to $700,000 for consultancies in OPM.
And with hurricane season now just four days away, the National Emergency Management Agency (NEMA) received no additional funding in the new budget, even as devastating storms like Hurricane Dorian are said to be our new normal, putting added pressures on NEMA to meet disaster response challenges associated with the impacts of climate change.
“Resilient Bahamas: A Plan for Restoration”, is the administration’s moniker for the 2020/2021 budget.
It is a goal all right-thinking Bahamians want the government to meet.
However, in the absence of a clearly articulated plan for promised resiliency and restoration yesterday, crisis-weary Bahamians were left with little more to comfort themselves than a promise.