2020/21 Budget Communication 2020-21 Budget Communication - Final (1)-compresse | Page 13

Mr. Speaker,
We have studied the COVID-19 responses of prudent Governments in the region and around the
world, and as a result of COVID-19, most Governments have found themselves in this very
position of major deficit spending. Daily as we watch international news, we see Governments
undertaking unprecedented spending measures. They like us recognize that a Government has a
unique mandate and responsibility in times of crisis and we will do our part.
This is not the ideal circumstance we find ourselves in. Far from it. It was just last November that
I reported to this House the lowest fiscal deficit in The Bahamas in nearly a decade. Prior to
Dorian, we were talking about the strongest tourism arrival figures and decreasing unemployment
as this Government was fulfilling its promise to restore the economy. But after back to back
monumental economic catastrophes, we find ourselves in a very different place and with a very
different reality. We cannot be tepid in our response. There is a substantial cost to implementing
the Resilient Bahamas Plan. But the prospect of doing nothing—or of doing too little—would lead
us to a much less desirable place.
Here is why, Mr. Speaker.
Impact on Government Revenue
Last September, in one single swoop, Hurricane Dorian slashed an estimated $232 million from
Government revenues. And just several months after that, we are now contending with a global
pandemic that has made the outlook for Government revenue even more bleak, especially in the
short-term.
1. We expect minimal to marginal contributions from our primary export sector—i.e. the
tourism industry—in the first four to five months of the fiscal year even as we push for the
responsible reopening of the tourism sector
2. We are forgoing millions in revenue from the continuation of Hurricane Dorian tax relief
measures for the first half of the fiscal year, and we are providing an extension of tax
incentives to help sustain employment and strengthen the domestic economy.
3. And overall, it will take time for businesses to rebound and consumer confidence to return.
When I presented the Budget Communication last year, we estimated the Government would
generate $2.6 billion in revenue. We are forecasting revenue of only $1.7 billion next year, because
of the dual external shocks of Dorian and COVID-19. That amounts to revenue that is $900 million
below where we were this time last year, when the economy was experiencing positive and steady,
economic growth.
What does this all mean? Mr. Speaker, the impact of our revenue shortage is one of the reasons for
the large deficit we are forecasting this year. The $900 million in lost revenue potential is
equivalent to some 35 percent of total Government annual spending on average. The falloff in
planned revenue is an unparalleled blow from these unprecedented economic shocks.
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