Progressive Liberal Party Deputy Leader Chester Cooper, who is also the shadow minister for finance, said the government’s revised deficit projections in the wake of Hurricane Dorian may be too conservative given the historic nature of the hurricane’s impact.
Minister of Finance Peter Turnquest told the House of Assembly last week, that the 2019/2020 fiscal deficit is likely to be $573 million, or 4.5 percent of gross domestic product (GDP); an overshoot of $436 million from the original target of $137 million.
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.
Cooper said the revenue loss may be much greater given that Abaco and Grand Bahama will likely remain economically hobbled for at least two years.
He also said the government has taken the wrong approach in cutting budgets in all ministries by 10 percent, when injecting more money into the economy would move the recovery process along faster.
“Grand Bahama, and most of Abaco’s, tourism product is, unfortunately, dead for now and will likely remain that way for at least two years,” Cooper told The Guardian.
“With the impact on economic activity and the precipitous revenue fall-off with hundreds of business closures and thousands out of work, there’s probably going to be a lot more than a $200 million hit.
“Keep in mind that there are likely potential cancellations in islands not impacted because of much of the misinformation in the marketplace.
“Bearing that in mind, I really don’t understand this intention to cut budgets in face of a compelling need to invest to restart the economic engine. The economics defy logic, really.”
Cooper said the government’s response to the disaster has been “slow”, with businesses only now being able to take advantage of a $10 million loan facility he deemed inadequate.
“This will all probably be exacerbated by the slow and horrid handling of the recovery to date,” he said.
“The government must be more assertive and innovative in this time of crisis.
“We should have gotten a detailed technical analysis, which will bring more credibility, especially for international rating agencies, rather than knee-jerk political commentary. I expect that there will be little forgiveness if the government gets this wrong.”
Cooper said the government also should not be “lulled to sleep” by the recent Standard and Poor’s (S&P) assessment that The Bahamas is “well-positioned to handle the fall-out” of the monster storm.
“I listened as the prime minister raved about the recent S&P bulletin,” he said.
“But I point out that the bulletin noted that impact could be limited ‘provided that the government is able to respond in a timely manner’.
“To date, they are not distinguishing themselves.
“The FNM was highly critical of the former administration for missing deficit targets due to Hurricane Matthew and Hurricane Joaquin.
“I am happy though that the FNM ‘has found religion’ and now realize that hurricanes do have adverse short-term economic impact.
“Given the frequency and severity of these natural disasters it would be wise to put in the annual budget a contingency for these eventualities.”