The Government of the Bahamas says the full impact of the coronavirus (COVID-19) pandemic and economic shutdown is not expected to be seen fully until the fourth quarter report as it noted that the country’s economic performance in the third quarter was dominated by rebuilding efforts associated with Hurricane Dorian that struck last September.
The Hubert Minnis administration said that the third quarter report was also dominated to a lesser extent, the initial impact of the government’s policy response to the pandemic.
According to the government figures, in the last nine months, the fiscal deficit widened by an anticipated 79.3 per cent to an estimated US$251.5 million.
It said despite the temporary decline in business activity in the storm-affected islands of Abaco and Grand Bahama, total revenue grew by US$67.9 million to total US$1.7 billion.
“The dual fiscal and economic impact of Dorian and COVID-19 is setting the stage for yet another unprecedented budget…”– Finance Minister K. Peter Turnquest
The increase, which represented 73.3 per cent of the revised budget target, was bolstered by the high volume of cruise arrivals up to February 2020 that strengthened departure taxes by US$5.6 million, or 5.4 per cent.
However, given the significant expenditure on hurricane recovery and restoration and other spending priorities, total expenditure grew by US$179.4 million, impacting the overall fiscal outcome for the budget period.
“We anticipated a spike in recurrent expenditure because of the allocations we made to increase capital expenditure, and to provide various allowances and support to essential workers of the public service and staff displaced by the hurricane among other things,” said Finance Minister K. Peter Turnquest.
“Further, we addressed several other spending priorities like union payments to civil servants and additional cash injections into the public health system that were foreshadowed earlier this year. Of the total increase in expenditure, over US$80 million can be directly attributed to new expenditures,” he said.
Turnquest said the country really started to see the fiscal impact of Hurricane Dorian materialise in the third quarter numbers.
“Obviously, the COVID-19 pandemic is going to further weigh on our fiscal performance, likely leading to a missed budget deficit target. To carry us through the remainder of the fiscal year, we will continue to reprioritise expenditure and adjust within our existing contingencies and borrowing authority,” he added.
The government said that the impact of Hurricane Dorian, which slammed into the country on September 1 last year, killing more than 70 people, was also felt in several revenue centres.
It said that following the execution of various Exigency Orders, collections of customs and import duties softened by US$4.8 million to US$194.6 million. Similarly, taxes on international trade tapered by 0.1 per cent or US$0.5 million, and taxes on exports narrowed by US$1.3 million, or 13.7 per cent, over the nine-month period.
“The dual fiscal and economic impact of Dorian and COVID-19 is setting the stage for yet another unprecedented budget that will be necessary to navigate a successful recovery,” Turnquest said.
“As the country traverses uncharted territories, the government will take the necessary steps to ensure adequate resources are made available for the critical health and other needs, while at the same time maintaining the core integrity of the Bahamian economy and society,” Turnquest added.