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DPM backs off commitment not to borrow as crisis escalates

The Nassau Guardian April 3, 2020

It would not be a “surprise” if The Bahamas’ COVID-19-related economic losses reach $2 billion, Deputy Prime Minister and Minister of Finance Peter Turnquest said yesterday, adding that the government cannot “firmly” say it won’t need additional borrowing following the pandemic.

Last month, he said projections indicated that losses from the pandemic could total $1 billion over a four-month period.

However, yesterday, Turnquest told The Nassau Guardian “there’s no doubt that we are going to exceed that” projection.

“Remember, that assessment was based upon the shutdown of the tourism

sector and the related businesses directly connected to it,” Turnquest said.

“We’ve had this complete shutdown except for the exempted businesses. That is having a significant effect on government revenue as well as on private-sector losses. So, we can anticipate that the losses are going to grow exponentially. We are in the process of trying to estimate that.”

Asked if initial projections were expected to double, he replied, “I can’t say that. You know, it would not surprise me, obviously, but I have no basis to say it at the moment, so I prefer not to speculate. I think it would be reasonable to expect that it is going to grow significantly from our initial estimates.”

Government revenue was already challenged prior to the COVID-19 crisis.

In September, Grand Bahama and Abaco — the second and third largest contributors to the Bahamian economy — were ravaged by Hurricane Dorian.

The Category 5 storm caused $3.4 billion in damage and losses, officials said.

In January, the finance minister revealed that the government will have to borrow nearly $600 million as a result of Dorian.

However, on March 18, as the COVID-19 crisis loomed over The Bahamas, Turnquest declared in the House of Assembly that the government had no plans to request additional borrowings.

Yesterday, when asked if the government still had no plans to borrow post-pandemic, Turnquest replied, “No, I cannot firmly say that.”

He continued, “The reality is that we are continuing to try to manage this event with our existing cover. However, as we all know, circumstances are changing daily, and the needs from the medical community, in particular, are growing and are not exhaustive.

“And so, we’re going to have to do what we have to do in order to support the medical community in the first instance.”

Turnquest also said the government will do what is necessary to support the public given mass layoffs and to support the business community “to ensure that they don’t all fail during this particular period”.

“As I said, the needs are broad and so, we have to continue to watch and be as prudent as possible but also prepare,” he told The Guardian.

“And so, at this particular point, we are making our assessments.

“We believe we are okay for a bit longer. Hopefully, this doesn’t deepen more in terms of needs and we can ride it through to our regular budget period. But, at this point, I cannot give that assurance that we will not need to borrow, not at this point.”

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