Bahamians must “tighten our belt” and prepare for an economic blow as a result of the country’s shutdown and the shutdown of world economies because of the global coronavirus (COVID-19) pandemic, Acting Financial Secretary Marlon Johnson said on Friday.
“This is inescapable, we’re going to see a significant economic blow,” said Johnson.
“Tourists will stop coming for some time. Hopefully they will return over a matter of months but it may be even longer than that.”
Financial pundits have been saying since the beginning of the pandemic that Bahamians will have to exercise frugality as the country’s lifeblood, tourism, slows down due to the rapid spread of COVID-19, and the need to shut down countries to contain it.
“What I have been saying all along is we really need to tighten our belt to really defer, put away and put off any unnecessary and non-critical spending,” he said.
“It will be tough over the next few months, but all of our resources will remain: the sun, the sand and the sea. And so once things clear up we will see a rebound. It’s important that we keep that in mind.”
Johnson assured that the government will not raise taxes and will not have to borrow more money, given that revenue in the first quarter of this year performed slightly better than anticipated .
“So that has given us a little bit of headroom in relation to where we thought we would end up,” he said.
“We know the last quarter of the year will be rough.”
Despite how rough it could be, Johnson said the recent borrowing the government did following Hurricane Dorian should bring it through the rest of the 2019/2020 fiscal year despite the challenges from COVID-19.
He said a lot of pending major capital works will have to be prioritized and likely put off while conferences and events that would have been significant expenditure to the government have been cancelled.
“The paramount concern is that we fund healthcare needs and then secondly all the social support for the people who might have been displaced because of this,” Johnson said.
He added that it is unlikely the government will increase taxes in order to make up for the shortfall in taxes that will be seen as a result of the economy’s slowdown.
“Our economy almost certainly will contract this year,” Johnson said.
“We have a real and present threat that is disrupting our economy; the question is, how do we position ourselves to ride out the worst of the storm and to position ourselves to be able to flourish when it gets back?”