The Bahamas government is closely monitoring fiscal risks to determine if, when and where adjustments may be necessary as the country continues to feel the impact of the worst global economic crisis in modern history brought on by the COVID-19 pandemic.
The Ministry of Finance, in a statement, said the government is actively responding consistent with the budget plan for the 2020-21 fiscal year and focus remains on funding critical government services, public health and social safety needs in particular, and the prudent management of the government’s fiscal resources.
It said preliminary data on the budget performance for fiscal year 2019-20 shows the dramatic impact of Hurricane Dorian and the COVID-19 global pandemic on the fiscal performance.
“The deficit saw an estimated threefold increase to US$788.1 million, from US$219.3 million in the previous year when the government then achieved the lowest fiscal deficit in over a decade,” the Ministry of Finance said.
Finance Minister K. Peter Turnquest said despite the strain on government finances, “we continue to meet our obligations while playing an important role to sustain domestic economic activity.
“Consistent with our budgeted plans, we are disbursing millions in unemployment assistance, maintaining public service salaries, and engaging in targeted capital expenditures to support the COVID-19 response and the broader effort to restore the economy,” Turnquest, said.
According to the Ministry of Finance, the severity of the COVID-19 impact on revenue performance was evident in the final quarter of the fiscal year with a pronounced 55.2 percent contraction in receipts, compared with the previous year.
It said the impact was broad-based with significant contractions in value-added tax (VAT) receipts being US$$169.2 million, customs and import duties US$54.2 million, departure taxes US$$27.6 million, while license to conduct specific business activity was pegged at US$37.6 million and gaming taxes US$8.2 million.
The Ministry said that recurrent and capital expenditures grew by a combined US$231.7 million or 8.8 percent to US2877.2 million, largely due to outlays for Hurricane Dorian and COVID-19 initiatives.
It said in the final quarter of the financial year 2019/20, the government spent over US$57.3 million directly on COVID-19 related recurrent and capital expenditures.