The Tribune

* DPM: Many projects waiting till next Budget

* Effort to close infrastructure deficit impacted

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Capital projects designed to stimulate the COVID-ravaged Bahamian economy have been placed "on hold" due to the Government's $200m spending cutbacks, the deputy prime minister said yesterday.

Desmond Bannister, who is also minister of works, told Tribune Business that a mix of large infrastructure projects and community-based initiatives have either been postponed or halted to contain the Government's fiscal deficit within the 2020-2021 Budget's $1.327bn goal.

While declining to identify the larger public sector works projects that have been impacted, or their total value, Mr Bannister voiced optimism that his ministry will still be able to "create opportunities for Bahamians" and provide an economic boost - albeit one that is more muted - during the final six months of the present fiscal year.

"It has impacted us in that we've put a number of stimulus initiatives on hold," the deputy prime minister replied, when asked by this newspaper whether public works projects have been hit by the Ministry of Finance's bid to slash a further $100m from the Government's capital spending.

"The smaller ones have gone ahead, the sidewalks etc, but the larger ones have been put on hold until such time as we get the kind of funding we need to move ahead with them. Any project that has not started, we are not going to start them until such time as the new Budget is passed."

Asked to identify which projects have been postponed and/or halted, Mr Bannister declined to go into specifics but added: "There are any number of them. There are lots of projects we have planned as stimulus initiatives throughout the country....

"There are any number of small capital works projects that have had to be stopped. Many of them are community-based projects. We've been working to improve parks and the like, and many of those projects are projects are going to be put on hold.

"I think the reality is that 2020 was such a difficult year, where people lost their lives and have been hospitalised, that we all have to make our sacrifices. We at the ministry (of works) understand that we have to sacrifice like everybody else in the country," he continued.

"The Government intends, as much as it possibly can, to still stimulate the economy. I anticipate, notwithstanding, the projects held off or put back, we are still going to have a chance to create some opportunities for Bahamians. I believe we are still going to have a chance to do that."

The deputy prime minister's comments are the first public confirmation of how the Government's plans to provide some stimulus to the depressed Bahamian economy have been thrown-off course by the ongoing financial constraints related to COVID-19 uncertainty.

Senator Kwasi Thompson, the newly-appointed minister of state for finance, said in the aftermath of the 2020 Fiscal Strategy Report's release that some $75.8m in unplanned COVID-19 assistance and previous lockdowns had forced the Government to target $200m in extra spending cuts over the final six months of the 2020-2021 fiscal year.

He added that the Minnis administration was aiming to slash $100m apiece from both its capital and recurrent (fixed cost) spending after 2020-2021 first quarter revenues came in $68m below projections while spending soared.

These cuts were cited as essential to keep the Government on track for a record $1.327bn deficit, as forecast in the May Budget, but they also give Bahamians an early insight into the harsh austerity measures - likely involving new and/or increased taxes and spending cuts - that will be necessary in coming years to cope with the debt blow-out produced by COVID-19 and Hurricane Dorian.

Public works projects are usually among the first to feel the impact from such expenditure slashes, as Mr Bannister acknowledged. This means that their impact, in terms of providing employment for Bahamians and "putting money on the ground" amid COVID-19, where it is spent by these workers in local communities with the likes of 'Mom and Pop' stores, will now be blunted.

The Government's original capital works budget, set at $151m for 2020-2021, was already well short of the $500m annual allocation that the deputy prime minister previously said was necessary to cure The Bahamas' infrastructure deficit. He yesterday conceded that the latest spending cuts are a further setback to efforts to close this gap.

"I think you are well aware of the need to improve infrastructure throughout the country," Mr Bannister replied to Tribune Business. "We are a tourism destination. We have to keep infrastructure safe and beautiful, and for many years we didn't keep up as we should have. The opportunity now was to be able to seek to do that. We're not going to be able to do that the way we would have liked."

Chester Cooper, the Opposition's deputy leader and finance spokesman, has repeatedly accused the Minnis administration of starving public infrastructure of much-needed capital upgrades by repeatedly slashing capital spending to stay in line with its fiscal deficit and debt targets.

The Government's Fiscal Strategy Report pledged that its goal is to keep capital expenditure "at a minimum of 2 percent of GDP" over the medium-term, a figure that is equivalent to around $200 per year - a sum well short of the $500m ideal advocated by Mr Bannister.

"After peaking at 3.8 percent of GDP in 2020-2021, capital outlays are forecast to recede to 3.4 percent in 2021-2022 as the need for immediate fiscal stimulus lessens with the expected gradual reflation of the economy," the report said.

"In the outer three years of the medium-term framework, the assumption is that capital spending would level-off and stabilise at two percent of GDP with the Government making much greater use of private capital to facilitate infrastructural development through mutually beneficial public-private partnership (PPP) arrangements."

It remains to be seen, though, just how much the Government is prepared to cut back capital spending and infrastructure works with a general election at most 15 to 16 months away. The Prime Minister's recent frequent Family Island visits for contract signings and public infrastructure openings indicate he is very much in campaign mode.

"We've done a considerable amount of work, and when the opportunity comes the Ministry will be ready again," Mr Bannister said. "We've done two large capital projects in Long Island, where the first bridge was built in the country since the 1980s. And we've finished the Monument Road.

"We've finished the bridge in Spanish Wells, the Russell Island Bridge, and will be there next week. We've finished the London Creek bridge in Andros, and that bridge will shortly be opened also. The Staniard Creek bridge is almost finished, as is the airport in the Berry Islands. We have a little bit of work left to finish that by this year.

"The gymnasium in South Andros is almost finished, and we expect it to be completed this year. That will be the prototype for other islands as we go. We've been going through the islands as we've been going along," he added.

"We've done a number not even mentioned yet, and are working around these constraints to complete any projects that have been started and to plan for next year to see how we can continue with developments that are spread all over the country."