Turnpage

Please visit our sponsors

RSS Feed
 

Current News & Press

 

Advertisement

The Bahamas Investor

News & Press Archives

 
The Bahamas Investor on facebookFollow The Bahamas Investor on TwitterSubscribe to RSS feeds from The Bahamas Investor
HOME > 
News & Press > 
DPM: FY2019/20 fiscal deficit expected to increase by $667m

Deputy Prime Minister and Minister of Finance Peter Turnquest said given the revenue loss and expenditure increases the government expects to incur, the fiscal deficit for FY2019/20 is now expected to increase by approximately $677.5 million, to 5.3 per cent of the gross domestic product. (Stock photo)

Source:
Date:
Updated:
TheBahamasInvestor.com
Friday, January 31, 2020
Friday, January 31, 2020

Deputy Prime Minister and Minister of Finance Peter Turnquest said given the revenue loss and expenditure increases the government expects to incur, the fiscal deficit for FY2019/20 is now expected to increase by approximately $677.5 million, to 5.3 per cent of the gross domestic product (GDP).

“This exceeds the approved budget target of $137 million, and therefore has corresponding implications for the financing envelope,” DPM Turnquest stated as he presented the Supplementary Budget Statement in the House of Assembly, January 29, 2020.


He noted that to cover the costs associated with the hurricane, and the spending imperatives previously outlined, the government will now require new financing in the sum of some $507.9 million. It is the government’s intention to source these funds through a number of potential facilities, including:

  • the $100 million IDB contingent credit line—of which $80 million is likely to be drawn down;
  • a $50 million loan from the Caribbean Development Bank (CDB);
  • up to $200 million in a club loan from a consortium of domestic bank lenders; and,
  • the remaining $177.9 million will be sourced by way of other instruments.

DPM Turnquest said: “These sources which I have identified will be supplemented with $20 million from the Dormant Accounts Fund and the $12.8 million payout from the Caribbean Catastrophe Risk Insurance Facility (CCRIF) which, together with the $507.9 million in borrowings, will cover the $540.7 million required in new financing.”

He added that he would be presenting a draft resolution for the $50 million policy-based loan from the CDB, which he mentioned as a part of the list of potential financing options for the government.

“This facility is intended to provide financial support to hurricane recovery as well as to maintain ongoing reform. With an interest rate of 4.8 percent and an eight-year maturity with a grace period of two years, the government agreed that this facility is necessary to progress restoration efforts.”

The DPM explained that the government is also using this opportunity to advance its liability management initiatives.

“As was done in FY2018/19 with the conversion of The Central Bank of The Bahamas advances to long-term debt, the government will convert $80 million of its short-term debt to long-term in FY2019/20. This will also meet the continuing demand of the market for longer term government paper. In doing so, the total financing requirement will increase by this $80 million to $587.9 million; however, as the short-term debt will be repaid once the conversion is complete, the conversion of this $80 million will not increase the level of outstanding public debt.”

He stated that taking the financing requirements into consideration, the level of government debt is, therefore, anticipated to increase from the projected $7,612.0 million at the outset of the budget, to $8,204.5 million, or some 64.4 per cent of GDP.

“It is the government’s intention to maintain a very close tracking of expenditures and revenue in the coming months, to determine the extent to which we could realize savings from the revised fiscal positions we are presenting here today.”

DPM Turnquest said: “For example, we have seen particularly good performance in revenue collections up to the midpoint of FY2019/20, against the backdrop of our revenue enhancement initiatives, namely, the establishment of the Revenue Enhancement Unit (REU) in July and the rollout of the Customs Electronic Single Window, Click2Clear. The updated fiscal position of the country will be published in our Q2 Fiscal Update report that will be published in a matter of days.”

An advance team of the Organization of American States led by Ambassador Francisco Lainez visited The Bahamas for the second preliminary meeting to coordinate preparations for the 50th OAS General Assembly, which is scheduled to be held on New Providence, June 9-12, 2020.

Ground was broken last week on a major new infrastructure residence and multi-purpose complex at the University of The Bahamas. Phase 1 of construction on the $95 million project is anticipated to be completed by June 2021.

The Bahamas Investor
Administrative Links
  


  © 2020 ETIENNE DUPUCH JR PUBLICATIONS LTD