Govt seeking to borrow nearly $1 billion

The government is seeking parliamentary approval to borrow nearly $1 billion to finance COVID-19 mitigation expenses for the remainder of the fiscal year, among other obligations, as well as to cover the projected deficit for the upcoming fiscal year.

Prime Minister Dr. Hubert Minnis read two borrowing resolutions in the House of Assembly today after he laid out the government’s plan to restore the country’s fiscal health and improve revenue administration.

Minnis said the government intends to borrow $115,247,319.15 for mitigation and treatment of COVID-19; to support the Public Hospitals Authority’s modernization of the health system; and to incentivize medium and small businesses.

This round of borrowing will exceed the total amount of $1.3 billion agreed on for the 2020/2021 fiscal year.

Minnis said the government is also looking to borrow up to $871,645,371 to finance the deficiency of revenue over expenditure in the 2021/2022 fiscal year.

As a result by June 2022, government debt is projected to swell to $10.386.4 billion, equating to 84.3 percent of GDP.

“Responding to the twin calamities of Dorian and the COVID-19 pandemic has significantly elevated our country’s debt as we have been compelled to mount a response equal to the challenge,” Minnis said during his  communication.

“We do not gloss over this fact or seek to avoid our responsibilities as stewards of the people’s money.

“…Given the substantial increase in financing required during the current fiscal year and the anticipated financing for the new fiscal period, debt servicing charges have increased over $100 million from the prior period.”

As it relates to the government’s fiscal outlook, Minnis said signs are pointing to a global rebound in 2021/2022.

Total government revenues are projected at $2.247 billion, representing an increase of $588.3 million or 35.5 percent over the projected 2020/2021 total revenue.

“Despite this improvement, revenues are projected to remain 7.5 percent below the $2.426 billion posted in 2018/2019, reflecting the fact that our economy will not likely return to full capacity during the upcoming fiscal year,” Minnis said.

Recurrent expenditure is estimated at $2.83 billion, an increase of $270.1 million or a 10.6 percent increase over the projected spend for 2020/21.

“While we anticipate a reduced need for support as the economy rebounds, the current budget still anticipates some $100 million in direct COVID-19 related support in the form of food assistance, unemployment assistance and health sector support, as well as the revenue foregone on the Government’s Employment Incentive Programme and other growth initiatives,” Minnis said.

Additionally, he said plans to gradually reduce subventions to the state-owned enterprises has been deferred for this year due to the effects of the pandemic on the customary revenue flows of these entities.

“Despite some return to normalcy, the allocations to Bahamasair, Water & Sewerage and Nassau Flight Services will be higher than typical years, as cash flow slowly returns to normal,” Minnis said.

On the capital expenditure side, the government is projecting some $372.4 million in capital outlays in the upcoming fiscal year.

While this is below the $515.5 million budgeted last year, it represents an increase over the projected $200 million in actual capital expenditure for this fiscal year.

Minnis said as a result of the revenue and expenditure developments, the fiscal deficit is estimated to come in at $951.8 million or 7.7 percent of GDP.  

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source https://thenassauguardian.com/govt-seeking-to-borrow-nearly-1-billion/