The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The government plans to borrow almost $120m to cover unbudgeted non-Dorian spending deemed “imperative for orderly, stable, sustainable and resilient governance”, it was revealed yesterday.

K P Turnquest, pictured, deputy prime minister, detailed several expenditures beyond the government’s budgetary limits that were approved in June 2019 including $30m to boost the civil service’s efficiency in delivering public services.

While this extra spending had been detailed in the government’s Fiscal Strategy Report released in November 2019, Mr Turnquest yesterday conceded that $23m - or 76.7 percent of this sum - was to cover the pre-Christmas lump sum payments awarded to civil servants.

“While the government continues to foster greater discipline in its fiscal affairs, there are some challenges that it cannot ignore, one of which is the pressing transformation of the public service to achieve greater effectiveness in the delivery of public services through skills enhancement and other human resources initiatives,” the deputy prime minister said.

“Towards this objective, the Government has set aside $30 million for fiscal year 2019-2020 and another $100m over the next three fiscal periods. Of the total for fiscal year 2019-2020, approximately $23m was expended in December 2019 toward lump sum payments to eligible civil servants.”

Other unplanned non-Dorian spending previously flagged by the Government, and which was included in yesterday’s $119.9m, was a $16.1m subsidy to Lucayan Renewal Holdings, the Government-owned special purpose vehicle (SPV) that holds Freeport’s Grand Lucayan resort ahead of its potential sale to the ITM/Royal Caribbean joint venture.

However, Mr Turnquest announced an additional $30m spend to finance the purchase of Bahamas Power & Light’s (BPL) new generation unit from General Electric (GE). That will be based at the Blue Hills power plant, with the deputy prime minister pegging the acquisition cost at $27.3m. Savings to the Government were said to be $2.7m.

Then there were the previously-unknown multi-million dollar upgrades for Princess Margaret Hospital. “The Government recognises that the current state of the Princess Margaret Hospital (PMH) is unsatisfactory, and the renovations to this key pillar of infrastructure can no longer be delayed,” Mr Turnquest said.

“Hence, the Government will bring forward an additional $37m in fiscal year 2019-2020 for spending related to the Public Hospital Authority (PHA) to initiate this renovation, as well as address a number of other critical operational needs.” The PHA is receiving a $12m increase to its subsidy for the current fiscal year, while the Ministry of Health’s recurrent spending budget has been expanded by $22.572m.

Rick Lowe, a fiscal hawk with the Nassau Institute think-tank, yesterday voiced concern that the Government could use Dorian’s devastation as an excuse to increase spending generally rather than just for post-storm restoration and recovery.

Describing the increased deficit and debt numbers (see other article on Page 1B) as “certainly an albatross” for The Bahamas’ fiscal future, he told Tribune Business: “I hope they’re not using it [Dorian] as an excuse to just spend.

“They have to know about those items but decide not to budget for them. It seems crazy. The BPL thing is understandable though not acceptable. Now the chips are down they’re throwing it all into the mess and will see how it works out.

“It’s certainly discouraging, and is going to lead higher taxation of course and the whole nine yards. Expansion of the economy is critical. You have more people going back to Abaco, but people are anticipating a two to three year drought.”

Mr Turnquest, meanwhile, yesterday reaffirmed the $157.6m increase in recurrent spending previously projected in the Fiscal Strategy Report. Taking total fixed-cost expenditure to $2.687bn for the 2019-2020 fiscal year, some $82.7m of the increase is associated with Hurricane Dorian.

The Ministry of Social Services is to receive an extra $9.8m for cash allowances, the Government’s figures revealed, as it seeks to expand the National Insurance Board’s (NIB) unemployment benefit from 13 weeks to 26 weeks for storm victims.

“Given the total incremental spending that the Government will have to undertake to initiate rebuilding and restoration efforts, we anticipate that total expenditure will increase to $3.073bn for fiscal year 2019-2020 in comparison to the $2.765bn initially budgeted and approved,” Mr Turnquest said.

“On the capital side, spending is estimated to grow by some $150.5m to a revised $385.5m, with $100m being directly related to hurricane restoration.”

Of the latter sum, $40m has been allocated to electricity restoration on Abaco, with a further $7m going towards helping small and medium-sized businesses. Some $5.7m will be directed to building repairs, $4.1m for clinic repairs, and $3m for repairs to the Rand Memorial hospital.

Mr Turnquest said some $31.8m of this sum had already been spent, including $3m on the Leonard Thompson International Airport in Abaco to restore it to international standards.