Tuesday, January 14, 2020
By NEIL HARTNELL
Tribune Business Editor
The deputy prime minister is voicing optimism that the outcome of yesterday’s Dorian pledging conference will reduce the government’s financial strain and enable fiscal consolidation to restart “quicker”.
K Peter Turnquest, speaking after $1.5bn in financial and “in-kind” support was receive from donors, told Tribune Business that such support would give the Minnis administration greater financial flexibility over reconstruction effort should it materialise.
He added that the pledging of this sum, equivalent to 44 percent of the total $3.4bn damages and losses estimated to have been inflicted on Grand Bahama and Abaco, comes as the government moves to obtain Parliamentary approval to borrow an extra $508m when the House of Assembly resumes on January 29.
Mr Turnquest said the pledged donations could help “offset” the government’s projected $677.5m deficit for 2019-2020 by ensuring it does not have to borrow or use that $508m to finance Dorian reconstruction and redevelopment efforts in the impacted islands.
“I think it was relatively successful in identifying not only some financial contributions but some in-kind services that we would be utilising in the affected areas - engineering, design, town planning, execution. A whole number of services were pledged,” he explained.
“We’re facing a $3.4bn-$3.5bn problem. Any assistance with funding to offset that cost is certainly going to help. This year we are looking at a very significant deficit which was unplanned, so to the extent we can team with partner entities to offset some of that cost, the more we’re able to save in that borrowing need.
“It is certainly going to be helpful towards us, whatever assistance we can get from these organisations and agencies, lowering that overall cost.”
Mr Turnquest agree that it was “kind of the idea” that yesterday’s pledging conference would remove some of the Dorian-related financial burden from the government, which is already grappling with a growing $8bn-plus national debt.
“The timing of some of this may require us to do the borrowing, but certainly the medium term and longer term impact could be less and we will get back to fiscal consolidation quicker,” he told Tribune Business.
“Just because we have this borrowing resolution doesn’t mean we have to borrow it. We only have the authorisation to borrow it. We’ll see how the pledges come in and the cost is offset, and that may give us room to delay some of the borrowing or use some for other purposes if that becomes the need.
“We have to see what the tangible results will be at the end of the day. We haven’t evaluated all the pledges yet to see what the impact is, what may be offered and any conditions attached. That will take place in the coming days.”
The largest pledge, some $975m, which accounted for almost two-thirds of the total, came from The P3 Group which focuses on private-public partnerships (PPPs) centred on “social infrastructure” such as health and education.
Its representatives said the Government’s $670m healthcare ‘wish list’ could be financed, and indicated they would seek to own revenue-generating assets for a period of time so that they would earn back their donation - how a PPP typically works.
Mr Turnquest, meanwhile, told the conference yesterday: “Unfortunately, as a result of Hurricane Dorian there is some slippage in our plan for fiscal consolidation. In fact, our current projection has drawn us out for an additional three years.
“We had originally hoped to achieve fiscal consolidation next year where we had already brought our deficit down to 1 percent, and looking towards a balanced budget in the next year, so we are looking at a three-year recovery strategy. As a result of the storm we have lost pretty much 18 percent of our GDP overnight.”
“We have to be very diligent and persistent, committed towards maintaining our current expenditure growth pattern. Even in the face of the challenges that we have had to resource following this storm we are re-prioritising our expenditure, re-prioritising the projects the government has planned over the year to ensure that we maximise the resources we have as much as possible.”
Mr Turnquest subsequently told Tribune Business that “the pace of the recovery effort has certainly picked up and shown some significant improvement in the last month”, with expectations that this will further intensify - and economic activity associated with community rebuilding increase - as the Government starts to provide financial assistance for home repairs.