PRESS RELEASE: Ministry of Finance-Midyear budget report shows anticipated macroeconomic shock of global pandemic

PRESS RELEASE
Ministry of Finance

Midyear budget report shows anticipated macroeconomic shock of global pandemic
Minister: ‘Revenue uptick noted in the months of November through January’

January 31st, 2021- The shock of the coronavirus pandemic on macroeconomic conditions continues to be seen in the government’s budget performance, according to preliminary estimates published in the Midyear Fiscal Snapshot and Budget Performance Report for FY 2020/21.
The significant widening in the fiscal deficit materialized in keeping with expectations from the Resilient Bahamas Budget Plan, which foreshadowed a necessary increase in recurrent expenditures for health and safety measures, to support social assistance programs and a significant decline in revenue receipts from subdued economic activity.
“We all knew the public purse and the economy would be hard hit by the pandemic, which is why we planned for it. What we are seeing in the midyear report is our budget expectations coming to fruition as we execute our restoration plan. The Government has been able to turn the tide on the pandemic and protect the economy from further fallout because of its timely and sizeable fiscal response, which prioritized public health and citizen welfare,” said Kwasi Thompson, Minister of State for Finance.
The fiscal deficit widened to $736.1 million from $194.0 million in the same period of the prior fiscal year, when the government was on hitting historic deficit lows. The necessary imposition of more restrictive COVID-19 measures in the opening quarter of FY2020/21 and the slower than anticipated recovery of economic activity in the ensuring months dampened revenue collections for the first half of FY2020/21. Aggregate expenditure increased by $112.1 million. COVID-19 social assistance alone accounted for a 10.1 percent increase ($119.5 million) in recurrent expenditure, while reductions in capital transfers of $17.5 million tempered capital outlays by 6.3 percent ($7.4 million).
“Not only is the government continuing to execute its Resilient Bahamas budget plan for the current fiscal year, but we have also adopted a new medium-term roadmap and fiscal strategy to address the macroeconomic conditions we are seeing play out. This means, we are taking care of our people by continuing our dynamic COVID-19 response; we are making short-term fiscal adjustments like reducing expenditures by an additional $200 million in the current fiscal year; we are laser focused on the economic recovery, which means investing in small business and accelerating structural reforms: we are optimizing the government’s debt management framework; and being vigilant and proactive in monitoring and responding to the ever changing market conditions,” said Minister Thompson.
“I wish to note in particular that we have seen a strengthening in the revenue performance as the domestic economy opened back up and the tourism trade began to pick up in November and December. While the month of January 2021 is not covered in this report, I am pleased to advise that preliminary indications are that we will likely meet and perhaps exceed the budgeted revenues for January, an encouraging sign in what has understandably been the country’s most challenging economic period ever.”
“We are a government that has consistently articulated and published our plans, and we have executed these plans. We shall continue to do everything in our power to restore the economy for sustainable and inclusive macroeconomic growth,” continued Minister Thompson.
The Ministry invites and encourages the public to visit the national Budget Website (www.bahamasbudget.gov.bs) to view the fiscal snapshot and report.
Source: Central Communications Unit, The Minister of Finance
Contact: MOFcomms@bahamas.gov.bs
Office of the Prime Minister
Commonwealth of The Bahamas