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Fiscal Outlook for 2020/21 framed within the context of COVID-19; no new taxes
By Llonella Gilbert
May 27, 2020 - 7:00:03 PM

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Nassau, The Bahamas - Deputy Prime Minister and Minister of Finance the Hon. K. Peter Turnquest said the fiscal outlook for 2020/21 for The Bahamas is framed within the context of the global pandemic (COVID-19), and the lagged impact of Hurricane Dorian, which would have been built into the forecasts at the time of the first Adjustment Plan.

“However, in the following years, our projections are based on the assumed pace of economic recovery, in conjunction with the Government’s medium-term socio-economic agenda,” the DPM added as he presented the 2020/21 Budget Communication in the House of Assembly, Wednesday, May 27, 2020. 

He said in the aftermath of Hurricane Dorian, revenue performance was revised downward by some $232 million for FY2019/20, but performed relatively buoyant despite subdued economic activity in the affected islands. However, the associated impact of COVID-19 has further weakened activity, which has negatively impacted revenue receipts.

“We are hopeful that the downward trends in new COVID-19 infections will permit the country to reopen by July 1st as foreshadowed by the Prime Minister. We recognize however, that even should we meet this milestone, the ramp up of the tourism trade will likely be slow.  

“While we remain hopeful that we can fill our resorts, hotels, bonefish lodges and vacation rentals immediately upon reopening, we are taking a more restrained view in our projections and modeling.” 

The DPM stated that as such, the Government anticipates total revenue for FY2020/21 of some $1.7 billion, which represents a $328.1 million, or 15.7 percent decline over the projected outcome for FY2019/20.  

No New Taxes

“I want to take this time to state, again, that the Government will not be increasing taxes or introducing new taxes in this Budget. Despite the projected weak performance in revenue, we are cognizant of the fact that this is not the right climate for increased taxation. It is our considered view that any such move would significantly slow down the timeliness of an economic rebound.”

He noted that on the expenditure front, outlays are anticipated to feature continued spend for hurricane rebuilding efforts, coupled with new outlays for measures related specifically to COVID-19. As noted earlier, these measures total nearly $136 million.  Thus, the Government has reduced a number of discretionary spending line items. 

DPM Turnquest said this has meant that some 42 agencies and departments are receiving reduced Budget allocations for the upcoming fiscal year.

He said the Government was mindful not to cut spending in critical areas. Allocations to the Department of Public Health, for example, which now has its own Head in the Budget Book, totalled $45 million. This, paired with the allocations to the Ministry of Health constitute funding of over $300 million to the public healthcare system in the upcoming Budget, an increase in allocation of $18.5 million from the previous year

The DPM noted that as a result, the Government has budgeted recurrent spending at $2.6 billion, which is $35.3 million or 1.4 percent higher than the revised budgeted sum of $2.5 billion for the Supplementary Budget.

He added that comparatively, capital expenditure will feature a number of projects that support hurricane restoration, to help rebuild Grand Bahama and Abaco.  

DPM Turnquest stated that in addition, the Government will be maintaining its investment in education, to ensure that all eligible Bahamians are able to access free tuition, from preschool to University. “In fact we have increased the allocations for the UB scholarship initiative by $1.5 million, and the Bahamas Technical & Vocational Institute by some $500 thousand, in anticipation of an increase in enrollment as these tertiary institutions have signaled an increase in applications in the aftermath of the COVID-19 situation.”

He added, “Further, we will expand our investments in hospitals and clinics, road works and other civil projects across the Commonwealth to boost critical infrastructure and generate near-term job opportunities. All told, we are boosting capital spending to total $515.5 million, which is equivalent to a $190.0 million, or 58.4 percent increase over the projected outturn of FY2019/20.”

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