The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas would not have been able to finance the health, unemployment and business support measures to mitigate COVID-19’s fall-out without the IMF’s “emergency” $250m loan.

The Office of the Auditor General, in a report tabled in the House of Assembly yesterday, revealed that the financial support from the International Monetary Fund (IMF) was critical to providing the government with sufficient cash to make it to the end of the 2019-2020 fiscal year following what it termed “a collision of catastrophes”.

“The collision of both catastrophes, Dorian and COVID-19, put the Budget in a crisis, tax receipts going down and government payments increasing,” the report said. “The required $250m funding assisted in addressing the supply and demand shock, and having provision for the economic downturn.

“Most importantly, the funding was vital in facilitating the urgent measures taken by The Bahamas with respect to socio-economic impact and public health resiliency..... The $250m was essential in providing budgetary support and sustaining the healthcare and mitigation measures in response to COVID-19.”

The Office of the Auditor General’s report gives an insight into how close The Bahamas came to fiscal and economic calamity after the bulk of its tourism-led economy was shutdown in the early months of the COVID-19 pandemic by lockdowns and other associated restrictions.

The report said the full effects of the fiscal impact on the government’s revenue took a while to show through, but peaked in June 2020 when VAT revenue collections plummeted by 77 percent year-over-year from $122.66m in 2019 to just $27.898m.

That followed declines of 34 percent for April, when VAT revenues dropped year-over-year from $110.591m to $72.918m, and 52 percent in May 2020, when they fell from $74.436m to $35.847m. 

“In June 2020, VAT revenue is down by $94.76m, an equivalent to a 77 percent decline over the prior year, same month,” the Office of the Auditor General found. “Hence the $250m IMF borrowing support for COVID-19 related transactions is noted.

“In comparison to the $307.68m VAT revenue generated in the fourth quarter of 2018-2019, the $136.66m collected in 2019-2020 resulted in a substantial decline of $171m.... The debt financing of the $250m IMF loan assisted the Government in addressing the increased fiscal needs and addressing the $250.9m recurrent budget deficit in June 2020. Accordingly, the additional financing was needed.”

With almost $2m provided to the National Food Distribution Task Force before the 2019-2020 fiscal year ended, the Office of the Auditor General called for the “food debit management card” to be digitised.