Hurricane Dorian began to show its effects in the first quarter of the 2019/2020 fiscal year, though the financial position remained fair despite the fact, as the government prepares to re-evaluate its estimates next month in its 2019 Fiscal Strategy Report, Fiscal Adjustment Plan and Supplementary “Hurricane Dorian” Budget, a press release from the Ministry of Finance (MOF) stated.
The MOF released its First Quarter Report on Budgetary Performance for Fiscal Year 2019/2020 July to September yesterday and explained that the numbers in the report prove that the government’s “commitment to fiscal prudence prior to Hurricane Dorian” has left the country in a good position to manage the impact of the storm.
Deputy Prime Minister and Minister of Finance Peter Turnquest said in the press release that had government not made changes to the country’s money management systems and prepared the country for the shock of a natural disaster through the Inter-American Development Bank’s (IDB) contingent loan
facility for natural disasters and the Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Company (CCRIF SPC), the country’s fiscal position would be “exponentially worse”.
“While we still have some way to go, taking these proactive steps have created a situation where the country is fortunately in a much better position financially to address these unfortunate shocks to the economy and be able to rebound more strongly,” Turnquest said.
“The size of this shock will result in the government invoking the exceptional circumstance clause of the new Fiscal Responsibility Act, 2019.
“This is significant because it demonstrates the higher level of reporting, transparency and accountability mandated by the transformative new law. Although the public would certainly find it reasonable to adjust course because of Hurricane Dorian, the government can no longer make significant deviations to its fiscal plan and legally mandated targets without first presenting a plan and rationale to the public.”
According to the press release, this first quarter report reflects the initial drawdown of $25 million from the IDB $100 million contingent line of credit for natural disasters, which went to hurricane-related social assistance and relief and restoration initiatives.
“This debt along with other planned borrowings in the first quarter resulted in a net increase in the government’s debt of $64.3 million,” the release stated.
“The first quarter report reflects a small part of the planned expenditures for relief and recovery efforts associated with Hurricane Dorian. The full impact on budgetary developments is expected to be seen in subsequent reports during the fiscal year.”
The press release revealed that the government saw an unusual decline in customs revenue between August and September, which it attributed to the exigency order put in place following Hurricane Dorian.
The release also explained that value-added tax (VAT) receipts, driven by realty transactions, and non-tax revenue of $11.6 million received from the parametric insurance from CCRIF SPC led to an increase in revenue for the quarter.
“The strong tourism performance produced a significant increase in departure taxes, which firmed by $10 million (33.5 percent) to $39.8 million,” the release stated.