Shadow Minister of Finance Chester Cooper yesterday accused the Minnis administration of being a “lazy government” that lacks innovation after it was revealed that over $500 million will be borrowed to deal with the effects of Hurricane Dorian.
Cooper said the government should have focused more on economic growth than spending cuts to make the economy more resilient to external shocks like Dorian.
“There is no denying that Hurricane Dorian, the most devastating storm The Bahamas has ever seen, was bound to have an adverse impact on government revenues and expenditure,” he said in a statement.
“But based on the prime minister’s own characterization, what we see is a lazy government lacking innovation that once again retreats to the pure madness of borrowing and taxation. We will have more to say on the BPL (Bahamas Power and Light) rate reduction bond in due course.
“Having borrowed well over $2 billion to date, the government now plans on borrowing another $500 million; not to mention the $650 million Bahamas Power and Light bill this administration plans to stick on the Bahamian people.
“This is a record level of borrowing. It is all as a result of this administration being too focused on managing deficits rather than improving the cost of living and fostering economic growth.
“Had the government focused on fostering a stronger economy the impact of this shock would not have been so sharply felt on the economy.”
On Wednesday, Minister of Finance Peter Turnquest tabled the 2019 Fiscal Strategy Report, which revealed that the 2019/2020 deficit is expected to be $677.5 million, or roughly 5.3 percent of the gross domestic product (GDP).
Prior to Dorian, the government intended to meet a deficit goal of 0.5 percent of GDP by 2020/2021. However, Turnquest now says that won’t happen until fiscal year 2024/2025.
Cooper yesterday suggested that Turnquest has been hypocritical, noting that he condemned the Progressive Liberal Party (PLP) for using hurricanes as an excuse for poor fiscal management.
“Turnquest, himself one of the harshest critics of deficits due to hurricanes, has now apparently found religion,” he said.
“All the lofty projections now mean nothing. The painful VAT (value-added tax) hike that punished Bahamians who voted for this adrift government, seems to have been all for naught.
“More borrowing, likely more cutbacks, more unemployment and a BPL tax as the cherry on top.”
Cooper expressed doubt over the government’s likelihood of achieving its revenue projections, noting the shortfall experienced in the last fiscal year, when spending was cut to be able to meet the deficit goals.
“We also don’t believe this report includes a credible estimate of revenue collection, even with the Dorian adjustment,” he said.
“Last year, revenue was over $230 million below target without any hurricane impacting The Bahamas. In the first quarter of this fiscal year, revenue performance was not significantly different from last year.
“So, conservatively revenue might be $400 million below target this year. So, this means that the borrowing estimate is perhaps $230 million below what it needs to be for the government to function.”
Cooper also questioned how the government plans to raise $500 million for Dorian recovery and $650 million to fund BPL’s rate reduction bond from the same market at the same time.
“From whom will this money be borrowed and at what rate?” he asked.
“We suspect the government does not yet know. How is proper budgeting possible without this information? This is symptomatic of a government bereft of ideas.”