Wednesday, September 11, 2019
By NEIL HARTNELL
Tribune Business Editor
The government will make its first drawdown on the $100m Inter-American Development Bank (IDB) disaster recovery loan facility “within the next two weeks”, a top official has confirmed.
Marlon Johnson, the Ministry of Finance’s financial secretary, told Tribune Business that the government was still finalising how the funding available from the IDB will be disbursed and how the drawdown will be split into different tranches.
“The status of that is we’re still finalising the disbursement process,” he said, when asked by this newspaper whether the government had yet accessed that credit line. “That should be completed shortly, and we also have to determine the tranche payouts.
“There’s some internal things we have to do decide as a ministry as to how we want the money disbursed. Those are happening right now. There’s some other things that we have to give to policymakers on how they want things to progress. I would imagine in the next two weeks you will see the first drawdown on that.”
The $100m IDB contingent credit facility, put in place to give the government instant access to liquid cash and recovery finance in the immediate wake of disasters such as Dorian, is one of the largest sources of funding available in the wake of the storm that devastated Grand Bahama and Abaco.
The speed of restoration efforts, especially when it comes to key public infrastructure, will likely depend on how quickly this funding can be accessed by the Government and its agencies.
Mr Johnson, meanwhile, said the Ministry of Finance was conducting studies on the options available to the Government to both finance recovery from Dorian and, at the same time, mitigate the fiscal and economic fall-out for the country.
“A number of assessments are going on of the fiscal and economic impact of the storm, and all these things are going to brief policymakers on the range of options to mitigate the anticipated economic and fiscal impact and chart the course forward,” he added.
“We do know Abaco and Grand Bahama are the third and second largest economic centres, and fall right behind New Providence in terms of size. We anticipate the economic and fiscal impact will be substantial.
“There’ll be a hit to revenue inflows and economic activity in those areas. This is probably the second and third worst case scenarios, if you want to frame it that way, in terms of a potential hit.
“We want to do a full assessment so that we determine with some precision what the impact looks like so we provide proper analysis and options that can work.”
K P Turnquest, deputy prime minister, yesterday defended the Minnis administration’s decision to obtain insurance coverage for The Bahamas from the Caribbean Catastrophe Risk Insurance Fund (CCRIF) given that the near-$11m payout seems relatively minimal compared to the scale of Dorian’s devastation.
“Just for comparison’s sake, we’ve paid roughly $5m over the last two years, so if we’re getting $10m we’re $5m ahead,” he said outside the weekly Cabinet meeting. “We’re pleased and confident the coverage worked out.
“Heaven forbid a storm like we’ve seen with Dorian hits New Providence. The damage and cost would be astronomical. Without some protection by CCRIF we’d be flat on our back for a long time. We cannot do it on own. We need risk protection to address immediate needs.”
Mr Turnquest said the CCRIF payout was “more or less in line with what we expected based on the area of loss”. He added: “We’re going to be looking at that ourselves just to make sure the formula they’ve used makes sense and is in line with our thinking. That’s the insurance part, and we have to look at the rainfall coverage to see what we can get from that.”
The deputy prime minister suggested that a wide range of incentives and initiatives was now required to put Dorian-ravaged communities back on their feet, and he floated ideas such as “low interest loans, loan guarantees and grants for small businesses” as potential contenders.
Acknowledging that “a tremendous amount” of persons would need help to recover from Dorian, Mr Turnquest said The Bahamas’ building codes - and where and how persons built - would again need to be assessed in the Category Five storm’s aftermath.
“This is not going to be a short-term, easy road,” he emphasised. “This is going to be a patient, disciplined recovery to make sure we get it right.” Mr Turnquest said The Bahamas had to look beyond rebuilding what was there only for another storm similar to Dorian to come along and inflict a repeat.
Focusing on a “resilient” restoration, Mr Turnquest said: “We’re looking at what kind of subsidies and incentives we can give to the local business community to get them up and going as quickly as possible.
“The Abaco problem is a massive problem because their entire built infrastructure is flat on the ground. It’s almost like rebuilding a whole city. Residents have to be patient.”