Govt urged to spend Dorian recovery funds wisely
As the government prepares to borrow more than half a billion dollars to offset the costs related to Hurricane Dorian, a top banker yesterday cautioned the government to spend wisely.
“It is more important that we spend smartly as opposed to just spending. Spending $ 1 million in the right way will have the impact of $10 million. Spending $10 million in the wrong way will have the impact of $1 million. That is something not to be overlooked when we talk about the private sector and the public sector,” Chief Financial Officer of the Fidelity Group Gowon Bowe said in an interview with Guardian Business.
“It’s not about throwing money on the ground. It is about deploying money in a mechanism and in a manner that will allow it to have the greatest multiplier effect and reproductive strategy, meaning that it actually helps to reproduce further activity.”
The government announced last week that it will have to borrow an additional $507.9 million to properly manage the effects of Dorian.
In addition to rebuilding public infrastructure, the government has said a significant portion of borrowed money would be directed toward the social costs of the storm.
Eighty percent of homes and businesses destroyed in the storm were uninsured.
“It is saying how do I ensure that this is distributed in a manner that allows persons on the ground to as quickly as is possible recover,” Bowe said.
“So, we want to ensure that the money is directed toward new opportunities… and that’s not a cliché because we always say we want to give to small businesses.
“If we pause and think about the money that government is about to spend, in certain regards government has done a number of things with the small business development center, it’s talked about economic subsistence for its employees… We need to spend this money in a manner that it teaches a man to fish.”
The government allocated $10 million from the dormant accounts fund to help small businesses that were impacted by the storm and has also proposed a Bahamas National Recovery and Reconstruction Trust Fund, which it said it would borrow $300 million for, to provide up to $10,000 in grant money per household to help fund home rebuilding and repairs.
Bowe said while an economic slowdown will occur, a recession is preventable if the money is spent wisely.
“It’s always the hardest for an economist to explain to the average person that the way you come out of a recession is spending. And the person will look at you like, ‘You have to be insane, I don’t have anything to spend.’ It’s a case of building confidence in the economy, where persons are willing to advance spend on the belief that the recovery will be very swift. We are not talking about six months, but that it would be consistent, progressive and evolve over time,” he said.