The necessary reinstatement of curfews and lockdowns for the entire month of August exerted significant pressure on the country’s fiscal position in the first quarter of the 2020/21 Fiscal Year (FY), according to preliminary estimates published in the First Quarter Fiscal Snapshot and Report for FY 2020/21.
Revenue fell by 45.5% or $251.4 million compared to the same period during the previous fiscal year. Expenditures, on the other hand, increased moderately, largely to cover the costs associated with COVID-19 containment and mitigation.
Social assistance benefits, in particular, saw an almost eight-fold increase compared to the previous year. That represented some $40.7 million for unemployment assistance ($25.1 million) and food assistance and meal vouchers ($13.9 million). The largest capital outlay in the first quarter went towards the Access Accelerator Small Business Development Center to support business continuity and other development programs.
“The Government is making sizable outlays to respond to this crisis, and we are doing so in areas that can make the largest impact on the welfare of people: unemployment assistance, social support and small business assistance. In keeping with the budget plan, we have had to pull back on subsidies to state owned enterprises, with notable exceptions like our higher transfers to National Health Insurance and the Public Hospitals Authority,” said K. Peter Turnquest, Deputy Prime Minister and Minister of Finance.
Subdued economic activities had a significant impact on tax revenues across the board revealing an expected slump in revenue from VAT, import duties and departure taxes. These tax receipts, which represented 89.5 percent of aggregate revenue in the budget, declined by $229.3 million or 46.0 percent.
“The hampered reopening of the tourism economy and the extended curfews in October will no doubt put further pressure on our fiscal position and may cause some deviations from our budget projections for the second quarter. The safe reopening of our economy remains one of the most urgent priorities, and we must work together to follow public health protocols and adapt our businesses to better contain the spread of the virus,” said Minister Turnquest.
The Ministry invites and encourages the public to visit the national Budget Website (www.bahamasbudget.gov.bs) to view the fiscal snapshot and report. The Ministry will host a press conference next week to answer questions about the Q1 report and to discuss planned fiscal adjustments and new policy measures.