The government is looking at shaving 10 percent off each ministry’s budget in the wake of Hurricane Dorian, Deputy Prime Minister and Minister of Finance Peter Turnquest confirmed yesterday.
Turnquest told Guardian Business that the 10 percent budget slash has not taken place with immediate effect, as there are still considerations that have to be taken into account.
According to Turnquest, Prime Minister Dr. Hubert Minnis has asked for this austerity measure to be put in place.
In the aftermath of Hurricane Dorian, worries over rising budget deficits began to emerge as it became apparent that damage from the hurricane could be in the billions of dollars.
The Central Bank of The Bahamas (CBOB) stated in its Monthly Economic and Financial Developments (MEFD) report for August that there remains hope for positive growth for the economy in 2019, though considerably less than was forecasted before the passage of Hurricane Dorian.
However, it said the government’s fiscal position is expected to deteriorate over the near to medium term as it increases spending on key infrastructure and social assistance. Revenue is expected to decline due to the disruption in collections from Grand Bahama and Abaco, coupled with the tax exemptions afforded to those islands.
In 2017, the government asked its ministries to find savings in their departments that could add up to 10 percent of their budgets.
Turnquest explained that budgets could be cut by 10 percent as the government confronts the real expenditure figures that will be required to rebuild and refurbish parts of Abaco and Grand Bahama.
Catastrophic modeling and risk management company Karen Clark and Company (KCC) estimated that Dorian caused $7 billion worth of damage to The Bahamas, and insurance professionals have contended that insurance payouts could top $400 million as reinsurers begin to roll out payments.
To date, tens of millions of dollars of aid money has strewn into the country from myriad corporate bodies and international aid groups, and the country’s $100 million Inter-American Development Bank contingent loan for natural disasters has kicked in, along with the country’s catastrophic risk insurance payout of $13 million.