2020/21 Budget Communication 2020-21 Budget Communication - Final (1)-compresse | Page 12

The substantial impact of COVID-19 on our economy has already generated reaction from the
international market. Standard & Poor’s recently revised our sovereign debt rating down one notch
to BB last month. Although this was expected, it is a prime example of why we are developing a
robust and strategic recovery plan, so as to mitigate against future downgrades, and the attendant
negative elements that are attached to downgrades.
I would note here that the Government is intent on focusing its debt management strategy over the
medium term, to effect the best benefit to the citizens of The Bahamas. In this light, we are in the
process of a debt conversion for a number of loan facilities that will allow us to lock-in fixed rates
in a low interest rate environment. This should result in debt servicing savings even in the near
term.
Though it will not be easy, we can glean on the lessons from a number of our regional counterparts
that it is better to address these issues sooner, rather than later. To restore the fiscal affairs of our
country, this Administration will remain disciplined in its fiscal management over the medium to
long term.
v. Fiscal Policy Measures in This Budget
Mr. Speaker,
I now turn to an overview of the fiscal policy measures within this Budget, which represent one
aspect of our solution to the ongoing crisis.
a. Rationale for Fiscal Policy Decisions
While I will speak to the numbers in greater detail later, let me say upfront that the Resilient
Bahamas Plan will come at a necessary but unprecedented cost. What is at stake is the
unquestionable need to protect the Bahamian people, stabilize our economy and transform this
crisis into an opportunity for our national restoration.
To do this, we expect to run a deficit of some $1.3 billion, or 11.6 percent of GDP in the new fiscal
year. The imperative of investing in a strategy like the Resilient Bahamas Plan, coupled with the
associated revenue loss from subdued business activity will result in an unprecedented fiscal
deficit.
Mr. Speaker,
We have come to these decisions after careful consideration of many other options, including direct
tax increases and draconian cuts in expenditure. However, there will be no tax increases. Let me
say it again: There will be no increases in taxes.
While there may be headcount reductions due to retirements and expiring contracts for consultants
and services, there will be no public sector layoffs. There will be no one left to fend for themselves
while the economy is reeling from the worst slowdown in modern history. We will stand united in
support of people and communities, businesses and consumers, who are already feeling the strain
12