Kwasi Thompson
By RASHAD ROLLE
Tribune Senior Reporter
rrolle@tribunemedia.net
FINANCIAL Secretary Marlon Johnson said that although the country’s high deficits and debt are a cause of concern, they are not a cause for alarm, insisting an economic rebound from the COVID-19 pandemic will prevent the need for new taxes.
He spoke during a Ministry of Finance press conference yesterday.
The deficit for the current fiscal year is on track to reach an unprecedented $1.3bn while the deficit for the next year is projected to be a similarly extraordinary $951.8m.
Mr Johnson said of the deficit: “These are temporary and transitory. These are not structural. Where countries run into trouble is when they have structural deficits, meaning when an economy is at full tilt you’re still running big deficits. The deficits are occasioned because we had a substantial shutdown of the economy.”
“As the economy opens up, our revenues are returning and that means these are not structural, so we will reflate out of it. Yes, these are reasons for caution and concern, but these aren’t reasons for alarm. It would be reason for alarm if these were structural and long-term so going into the next year and the year after, the deficits will come down.”
Prime Minister Dr Hubert Minnis announced only targeted tax increases during his budget communication on Wednesday.
Asked if new taxes that affect a broader range of people will eventually be needed to take care of the public debt, Mr Johnson said no.
“To the extent to which we can get the economy opened – meaning all of us being vaccinated – that creates more economic activity which by itself generates additional revenue,” he said.
“To the extent that the Accelerate Bahamas plan works with small business and investment, and we get the economy on a stable growth trajectory, that takes care of all the considerations around increased revenue. The short answer is the extent to which we can get back on a firm, sustained economic footing, that obviates the need for additional taxes.”
Finance Minister Kwasi Thompson described the elevated deficit as the “elephant in the room.”
“Commentators have pointed out that the current fiscal year and the one to come have elevated borrowing by some $2bn,” he said. “As the Prime Minister said yesterday, in this administration, we do not gloss over this fact. The $1.3bn deficit in this current fiscal year and the $951m deficit projected for the 2021/2022 fiscal year, it really reflects the extreme economic crisis caused by Dorian and the pandemic and our response to these crises. This is what has caused us to postpone, but only temporarily, the path.”
Meanwhile, the Progressive Liberal Party criticised Dr Minnis’ budget communication on Wednesday, saying it “lacks credibility” and is “weak on solutions” to address a looming “debt crisis”.
“This is a budget that presents nothing to measurably confront the dire situation we are in,” Chester Cooper, PLP deputy leader, said. “It frankly lacks credibility. It appears to build upon the weak policy and a lack of strategy that undergirded the previous budget. The reality on the ground is that unemployment is still sky-high, and Bahamians are still catching eternal hell. In the face of the greatest fiscal crises in the modern Bahamas, this budget is weak on solutions.
“There is a looming debt crisis because of the levels of borrowing, weak negotiations and the onerous terms of loans undertaken by this administration, with no plan articulated today to address this with urgency,” Mr Cooper said.
Comments
John 3 years, 5 months ago
Two new low budget airlines were launched in the US recently and reports are business could not be better this Memorial Day weekend as millions of Americans plan to travel. Hotels are full, rental cars are impossible to find and all major resorts and attractions are booked and booming. Wouldn’t it be great if this country, that is set to borrow another $1 Billion can see its economy coming to life in that fashion. But, of course most Americans are stuck at home as cruise ships remain in port. Millions of passengers who would normally set sail this week remain in the US, which is good for their local economy but bad for countries like The Bahamas. And with the size of debt this country is saddled with, the government must look anxiously beyond its borders to bring in new money in great amounts to help service this debt. Most Bahamian and local businesses are taxed out. Andy’s, if the country is going to open to a booming tourist economy, amongst other revenue streams, then yes, the excessive borrowing is not too, too worrisome. But if the market is flat, then cause to wonder. And if there’s any good thing about all this borrowing: It wasn’t due to CORRUPTION and SCANDAL and LACK of ACCOUNTABILITY like under the previous administration. In fact most of the borrowing was because of unexpected events like hurricanes and pandemic. But still time to apply the brakes (with both feet) on borrowing.
tribanon 3 years, 5 months ago
LMAO. You really crack me up! With all that has happened since May 2017, do you truly believe for one moment that the current Minnis-led FNM administration is any less corrupt, any less scandalous and any less lacking in accountability than any other previous administration in the history of our country? If you do, then you're more vulnerable than most to the effects of the 'hot air sunshine' being blown up your arse by the most deceitful and incompetent likes of Marlon Johnson and Kwasi Thompson.
Sickened 3 years, 5 months ago
I guesstimate that only about $100million goes missing or is wasted every year now - which is orders of magnitude better than that other administration.
tribanon 3 years, 5 months ago
More than that was 'vaporized' on just the Grand Lucayan deal alone.
John 3 years, 5 months ago
Is your anger induced opinions noteworthy?
John 3 years, 5 months ago
YES!
ohdrap4 3 years, 5 months ago
When I look at his picture, I think: He never ceases to be amazed.
realitycheck242 3 years, 5 months ago
The Bahamas is on the border of a fiscal cliff with the depth to GDP at 84% at the end of the 2021-2022 fiscal year. All this depth is concerning because we have used up all the head room we have with all the borrowing. Having to pay over $500m every year to service this depth is disturbing because we are situated in hurricaine alley and this country is almost guranteed to be affected every year by some level of storm. Hopefully we never see the likes of dorian again in our lifetime. The end of the Pandemic is any ones guess because the coivid-19 virus continues to confound the medical professionsl world wide. This country has yet to state definitively if one of the known variants is causing this third wave. Any investment short of the size of Bahamar or Atlantis impact on the economy in another sector would be greatly neaded to turn this ship of state around to head in another direction.economically but another sector would be preferred. This budget is design to coast the Bahamas along like a car traveling down a deserted road trying to reach the next gas station. This FNM government is showing that it has a steady hand with this budget by not inflicting any additional financial pain on the small man The PLP has no alternative plan despite all their talk and we would have all been further up the proverbial creek if they had been in power. Their talk is to take us all for fools to get back at the cookie jar because the pandemic has drained the accounts of their croonies.
tribanon 3 years, 5 months ago
You die-hard FNM'ers are all alike and frankly just as bad if not worse than the die-hard PLP'ers. Small wonder the Bahamas's day of reckoning has finally come about as the world's lender of last resort, the IMF, will shortly be announcing with a firm voice.
Marlon Johnson's repetitious use of the word "structural" in the above article, as if he's just learned a new word to use, is most telling. He's no doubt been hearing that word an awful lot from his discussions with the IMF representatives who will soon be taking over the finances of our bankrupt nation and implementing severe "structural" reforms of the worst possible kind. Brace yourselves Bahamians....the misery index for life in the Bahamas is about to skyrocket. And for those of you who think I'm doing a Chicken Little act, I promise I won't say "I told you so!"
Dawes 3 years, 5 months ago
Every year the Government projects a time in the future when we will have close to a budget surplus. Then something happens and it doesn't occur. These idiots have no idea what to do to make the changes necessary to set the country up for economic growth. All they can think of is saying words they know they won't be around to deal with when they don't come true, and also set up a committee so they can get some more coffee and doughnuts on the back of taxpayers. And the ideas that the committee recommends would not be looked at or considered as they have no plan to do anything to change the trajectory we are on.
tribanon 3 years, 5 months ago
Simply unbelievable!!
And to think none other than the very corrupt, arrogant, nasty and vindictive Minnis appointed the grossly incompetent and most deceitful Marlon Johnson as our nation's financial secretary because megalomaniacal Minnis values undying loyalty to himself above all else.
DDK 3 years, 5 months ago
LUNACY FROM THE MOUTH OF A LUNATIC!!
John 3 years, 5 months ago
Dingy forget, ‘IT’S SILLY SEASON Y’ALL’. Idiotic posts abound.
TalRussell 3 years, 5 months ago
More like two logical plenty of good reasons for remaining at full worried alert, when both the financial secretary Marlon and minister finance Kwasi, are themselves on a transitory to full tilt, BS.
Sweet Comrade Jesus, imagine there are just these two standing guard over sustaining our realm's Sand Dollars, remaining at par with the USD, yes?
BONEFISH 3 years, 5 months ago
The acting financial secretary is simply out of his depth. You can't take nothing he says ,at face value. Kwasi is simply incompetent. This is one of Dr.Minnis's bad decisions coming to light.
tribanon 3 years, 5 months ago
One of Minnis's many, many bad decisions.....too many!
And let's not forget that Minnis's own bereftness of financial acumen is such that he can't even reconcile his own personal cheque book register. He's always had great difficulty understanding anything involving debits and credits.
Socrates 3 years, 5 months ago
We shouldnt be comforted by assurances that future budget deficits will come down.. so long as there is a deficit, it means the debt is still rising.. so a financial crisis is not a if, but more a when. What is equally concerning is a large portion of this debt will create nothing.. its handouts and debt servicing.
tribanon 3 years, 5 months ago
So why does the IDB continue putting its fat milk laiden lending teat (tit) to the constantly sucking lips of our corrupt government officials? It's patently wrong that the taxpayers of The Bahamas should be burdened with additional taxes to repay IDB loans for foolish government programs that no reasonably prudent and responsible lender would ever make to a borrower already known to be hocked in unsustainable debt.
Put another way, the IDB should not be rewarded by the taxpayers of The Bahamas for its reckless lending policies and practices aimed at currying favour with corrupt government officials and its own stakeholders rather than serving the interests of the Bahamian people.
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