DPM: Foreign reserves remain healthy

Despite the economic fall-out from Hurricane Dorian and the COVID-19 pandemic, Deputy Prime Minister and Minister of Finance Peter Turnquest said the viability of the Bahamian dollar remains robust.

He said the government is seeking external financing to cover its budgetary shortfalls and to support healthy external reserve levels.

“It is a strategy that is working,” he said in the House of Assembly on Tuesday.

“Notwithstanding the fact that we are five months plus into the near full shut down of our primary export sector, the international tourism market, our reserves remain at a fairly healthy $2.1 billion, equal to 38 weeks of import cover and close to levels at the start of the pandemic.

“The position of the public treasury is secure, and the viability of the Bahamian dollar and the exchange regime remain robust. This government has a plan. It is working its plan.

“…Although the situation is fluid, we are confident that we have enough reserves to take us through this difficult time until we fully reopen the all-important tourism sector.”

Turnquest said the Ministry of Finance is using the $1.3 billion borrowing authority approved by Parliament under the 2020/2021 budget.

“Under this authority, last month, we accessed $248 million as part of a $300 million bridge financing deal,” he said.

“We are also in the process of concluding a $200 million transaction with the Inter-American Development Bank and a $40 million facility with the Caribbean Development Bank.

“Further, we are readying ourselves for a capital market transaction as soon as market conditions permit and have under consideration other transactions to ensure that we can cover our budgetary requirements for this fiscal year.”

Turnquest also confirmed that the government intends “to continue our commitment to not raise taxes”.

“The economy is still in a fragile position and adding additional taxes to that is not going to help with the growth and expansion that we need or the stabilization of the existing economic base.”

However, Turnquest said the government has enforced its planned cut in non-essential expenditure allocations by 20 percent across all ministries.

He noted the government has maintained critical expenditures in priority areas such as public health, social support, public infrastructure, small business support, and employment retention, including the retention of public sector employment levels.

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