Five months after the country’s Fiscal Responsibility Act (FRA) became relevant to the government’s fiscal affairs, the government has been forced to invoke the act’s “exceptional circumstances” clause after realizing the economic damage from Hurricane Dorian.
A press release from the Ministry of Finance (MOF) released yesterday explained: “Deputy Prime Minister and Minister of Finance Peter Turnquest tabled the 2019 Fiscal Strategy Report (FSR), which is a legally mandated document that outlines the fiscal strategy that will guide the government’s future budget planning activities along with a medium-term macroeconomic and fiscal outlook. Hurricane Dorian and the costs associated with the recovery effort are significant features of the 2019 FSR.”
Hurricane Dorian decimated parts of Abaco and Grand Bahama, causing an estimated $3.4 billion in damage and forcing the government to “adjust its budget and fiscal targets for the current fiscal year and its medium-term fiscal plan”.
Turnquest explained in the release that the FRA, as followed, ensures the government can no longer make deviations from its planned projections with no accountability to Parliament and to the Bahamian people.
“Government must have reason to invoke the ‘exceptional circumstances’ clause of the act and like we are doing now, we must explain to the Bahamian people the reason for the change and outline our plan to get back on track,” said Turnquest.
“This is a new accountability feature that will help the overall fiscal management of the country. The 2019 FSR that we tabled today fulfills the legal obligations and provides the Bahamian people with an inside look into the country’s fiscal performance, outlook and future plans.”
Yesterday the government outlined that it has had to adjust its expenditure, revenue and corresponding deficit targets for fiscal year 2019/2020, “given the additional costs associated with the provision of social assistance programs and restoration and reconstruction activities in the aftermath of Hurricane Dorian”.
“For the government, Hurricane Dorian has been a stark reminder of the country’s vulnerability to climate change as an island nation,” the MOF release stated.
“It is a reminder that the best of fiscal plans can be usurped by external factors outside of our control.”
Turnquest said the government remains committed to fiscal responsibility and to maintaining the fiscal objectives set out in the FRA.
“We do not regard this experience with Hurricane Dorian as an opportunity to spend wildly, but to target our resources towards achieving enhanced macroeconomic resilience as we rebuild a better, stronger Bahamas,” he said.
“We will not be derailed. The recovery of our people and our economy is a key priority of this administration and we will continue to create policies that will be beneficial to the citizens of the Commonwealth of The Bahamas.”