Bahamas Deputy Prime Minister at UB Sustainable conference
#FREEPORT, The Bahamas –March 12, 2020 — Deputy Prime Minister and Minister of Finance, the Hon. Peter Turnquest said it is imperative for Bahamians to be open to knowledge sharing, given the new realities The Bahamas faces when it comes to catastrophic hurricanes.
As keynote speaker during opening ceremonies of the University of the Bahamas’ second annual Sustainable Grand Bahama Conference at Pelican Bay Resort, March 5-7, 2020 in Freeport, Grand Bahama, Minister Turnquest noted The Bahamas is no stranger to surviving natural disasters.
“We have a long history of withstanding hurricanes, notwithstanding the unprecedented devastation that Hurricane Dorian caused,” said Minister Turnquest.
“Why is that significant? That means we have a lot of insight to share as well as lots of new learning still to do. We have proven our resilience before, and we will rise to the occasion demanded by Hurricane Dorian to strengthen our institutions, our processes, our disaster management frameworks so that we can continue to demonstrate our resilience well into the future.”
One of the most important lessons learned by the government, he said, was the importance of strengthening the government’s national framework for response, recovery and reconstruction. Pointing out that the historic scope of Dorian’s destruction required the government to acknowledge the need for new state structures to serve more effectively.
“We established the new Ministry of Disaster Preparedness, Management and Reconstruction to streamline how we prepare, recover and rebuild in the event of a disaster,” said Minister Turnquest. “We are updating our laws, policies, procedures and state agencies to support this strengthening of the national disaster management mechanism.
“Also, as an Administration, we see where the insurance industry is a ripe area for lessons learned. Flexible insurance policies that allow for tailored coverage are essential for meeting country-specific needs in the region.
“The Bahamas had the benefit of a $12.8M payout from the Caribbean Catastrophe Risk Insurance Facility (CCRIF). I am proud to say the Minnis Administration pioneered the restructuring of this policy, which allowed us to actually receive a benefit in our time of need.”
Minister Turnquest said another lesson learned from Dorian was the importance of investing for now and the future. He noted that the cost to finance the Hurricane Dorian recovery is quite significant, and has required the government to borrow money.
He added that based on the lessons learned, one of the ways the government is investing these borrowed funds is on strategic investments that will benefit the country now and in the future. The Minister said his government has committed $100 million in IDB loan-financing so far to firmly establish renewable energy initiatives in the Family Islands, over three years, via the Family Islands Solarization Project.
This investment, he said, will facilitate the development of utility-scale and roof-top solar facilities, and help the country to leapfrog the goal set by the Prime Minister’s Office for the country to produce 4.56 percent of its total energy mix from renewable sources by 2021.
“The last thing I will touch on is the importance of boosting economic activity to support hurricane recovery, and the lessons we learned from Dorian,” said Minister Turnquest.
“The Government unveiled an unprecedented package of tax incentives and concessions as a key part of the establishment of the Special Economic Recovery Zone (SERZ) in the aftermath of Dorian. The SERZ programme represents a pioneering approach to providing direct support and assistance to Bahamians in a way that had never been contemplated before in the history of the country.
“We also tailor-made a suite of small business development programmes specifically for businesses damaged in the Disaster Zones and approved $10 million through the Small Business Development Centre to ensure they get back on their feet quickly and with support.”
Minister Turnquest noted that the current climate crisis and the associated catastrophic risks of natural disasters present a real threat to The Bahamas, with impacts that are uniquely felt by small island developing nations.
“With each passing storm, whether it is at the doorstep of Dominica, the British Virgin Islands or the Islands of The Bahamas, more and more of our vulnerabilities are exposed: not only in terms of our economic resilience and national response, but also at the individual level, for families wondering about their physical safety, and their economic security should they be in the path of the next storm.”
PM Davis ‘confident’ that Revenue Outturn will near $2.9 billion
By ERIC ROSE
Bahamas Information Services
#NASSAU, The Bahamas, May 30, 2023 – Prime Minister and Minister of Finance the Hon. Philip Davis said in the House of Assembly, on May 31, 2023, that public revenue receipts were strong over the nine-month period of July 2022 to March 2023, due to legislative reform, effective policy decisions, strengthened economic conditions and more efficient collection efforts.
“Analysis of the trends of the first three quarters of this fiscal year, and the years prior, suggest that the government is potentially set to exceed the $2.85 billion target set forth in the February 2023 Mid-year Supplementary Budget,” he said, during his Communication on Budget 2023.
“I am confident the revenue outturn at the end of the Fiscal Year 22/23 will near $2.9 billion.
Public spending has remained on track, and is well within the budgeted amount,” Prime Minister Davis added. “For this reason I am confident that expenditure at end of the Fiscal Year 2022/23 will almost reach the target of $3.1 billion set in the Supplementary Budget.”
He pointed out that the primary balance will, therefore, record a surplus of $68.4 million at the end of the fiscal year, a $54.8 million increase from the $13.6 million surplus projected in the supplementary budget.
“Likewise, the overall deficit is expected to improve to $520.6 million, down from the $575.4 million outlined in the supplementary budget,” he said.
Speaking of Government financing, Prime Minister Davis said that The Bahamas’ borrowing costs had begun to experience a downward trend in the previous quarter; but the cost of borrowing rose at the end of March 2023.
“At the end of the third quarter, the total average cost of borrowing for current outstanding debt had risen to an interest rate of 5.55 percent,” he pointed out. “This is notably higher than the previous year’s rate of 4.93 percent at the end of March 2022.
“This increase in borrowing costs is primarily attributable to the higher costs associated with external loan facilities.”
He added that, more specifically, the average interest rate for external financing had risen by 1.99 basis points, resulting in a rate of 5.55 percent as of March 2023, compared to the preceding year’s 3.56 percent.
“Throughout the past year, the interest rate policies of the major Central Banks have been restrictive, with a series of interest rate increases,” Prime Minister Davis said. “These adjustments have been primarily motivated by the escalation of inflation, and the resulting upsurge in interest rates has had an impact on the Bahamas’ external borrowing costs.”
He added: “However, the cost of borrowing in the domestic market has been declining over the past quarters.
Looking at it in more detail, we can see that:
- The average interest cost for domestic loans subsided by 27 basis points to 4.62 percent at end of March 2023, from 4.89 percent in the previous year;
- And the average interest cost for domestic bonds subsided by 3 basis points to 4.63 percent at the end of March 2023 from 4.66 percent in the previous year.”
Prime Minister Davis noted that those statistics affirmed the Government’s latest medium-term debt strategy, which aimed to shift its borrowing away from costly external commercial debt.
“Such debt has seen a sharp increase over the past five years, including recent interest rate hikes,” he said. “This strategic move will enable the government to once again rely predominantly on the domestic market to meet its financing requirements.”
Prime Minister Davis pointed out that, when considering the maturity of debt, or the average time it takes to repay the principal amount in the government’s debt portfolio, a longer maturity period led to a reduction in refinancing risk.
“In essence, prioritizing longer maturities is key to managing debt effectively,” he said. “And so another element of the government’s medium-term debt management strategy is the goal of prolonging the average maturity time of its debt.”
Prime Minister Davis said that, in the face of “unprecedented turbulence” in the global financial markets, the Government was able to maintain its average time to maturity.
“At end of March 2023, the average time to maturity has decreased slightly to 6.7 years, down from the previous 6.8 years in March 2022,” he said. “This variance is due solely to the external loan component, as the average time to maturity on internal debt has remained steady at 7.1 years.”
“This highlights the significance of maintaining a prudent approach to debt management, and aligning this administration’s practices with the government’s optimal debt strategy,” Prime Minister Davis added.
“It is imperative that we continue to exercise prudence in this area to ensure financial stability.”
(BIS Photos/Ulric Woodside)
PM states HCA model not working during budget debate
By ROBYN ADDERLEY
Bahamas Information Services
#FREEPORT, Grand Bahama, May 30, 2023 – The model of the Hawkbill Creek Act, the agreement between the Government of The Bahamas and the Grand Bahama Port Authority, is not working, said Prime Minister the Hon. Philip Davis during the opening of the 2023 Budget Debate on Wednesday, May 31 in the House of Assembly.
The island of Grand Bahama, he said, contributes 12 percent of the country’s GDP, however, there was a decline by 9 percent when compared to the previous year. Tourism, he said, increased in 2022 showing a growth in accommodation and food service.
“Unfortunately, the statistics show a prolonged decline in the Grand Bahamian economy. The evidence confirms the view of my government that the Hawksbill Creek economic model, which was meant to attract foreign direct investment, does not work.
“Furthermore, in our view, the government model of the Grand Bahama Port Authority must change, in order to realize the promise, growth and prosperity we all desire.
“Additionally, the Government of The Bahamas has serious concerns regarding the compliance of the GBPA and its related companies with the terms and conditions of the Hawksbill Creek Act, and its subsequent amendments.”
In the past, said the Prime Minister, administrations have attempted to address the issues however they appear to be “systemic and fundamental.” Decisive action will be taken, he continued, and a separate detailed announcement will be made at another time.
Prime Minister Davis mentioned that even though the GDP for several islands has experienced growth, Abaco and Grand Bahama have not done as well. Abaco, he said, saw a decline of 6 percent in 2022 with its contribution to the economy at 2.8 percent ranking the island as the third largest contributor.
“While there was a slight improvement in Abaco’s economy compared to 2019, it has yet to reach the levels seen before Hurricane Dorian. The decline in the economic activity is directly related to the slowdown in the real estate and construction sectors.”
He continued, “Declines in the real estate sector are directly as a result of a shift to higher intermediate consumption in 2022 from that of the previous two years. In terms of declines in construction, it should be noted that in 2020 and 2021, Abaco experienced significant recovery efforts in the form of debris removal, site preparation and building of damaged structures.
Such efforts bolstered the value added to the island’s GDP during those years. As those efforts wrap up, the industry saw a gradual decline as construction tempered to normal levels in 2022, resulting in a lower GDP.
Additionally, the Prime Minister said the Grand Bahama International Airport will be repaired, and a new healthcare facility will be built. Provisions have also been made for the continuation of an employment program for $4.7 million, along with the construction of a 50-meter swimming pool facility.
The House of Assembly has adjourned until Wednesday, June 7, when the debate will continue.
(BIS Photo/Ulric Woodside)
The Bahamas most at risk for climate change impacts, book brings issue forward
#TheBahamas, May 30, 2023 – Bahamas’ vulnerability to climate change is alarmingly high as commonly known, and a new book now emphasizes that the country faces greater risks than nearly any other country.
The book, published May 23rd, 2023, is called Sea Change, An Atlas of Islands in a Rising Ocean and it is written by Christina Gerhardt, academic author and environmental journalist.
In her book which features several Caribbean islands as well as locations outside of the Caribbean, she informed that Bahamas’s low elevation, abundant limestone and high population density along coastlines puts the country in a position where it is most at risk from climate change impacts.
This clearly threatens the very existence of the Bahamas as well as other countries in a similar situation. However, The Bahamas is high on the watch list especially since it is “at a high risk of hurricanes and tropical storms because the archipelago sits at the northern end of the Atlantic ‘hurricane alley’,” the book says.
In the introduction, on page 1, Gerhardt expressed this worrying reality by saying “Atlases are being redrawn as islands are disappearing.”
The book builds on projections from Climate Central, a non-profit organization that analyzes and reports on climate science.
On Monday May 22 [will verify this date] The Guardian British daily newspaper published a piece from Gerhardt’s book and it read, “According to a report on the threat of sea level rise in the Caribbean by Climate Central, ‘The Bahamas confront by far the greatest proportional threat: 32 per cent of land [and] 25 per cent of population … are below 0.5 metres [1.64 ft]’.”
It continues, to compare which island are more likely to be affected, The Bahamas topping the charts.
“According to the Intergovernmental Panel on Climate Change (IPCC)’s fifth assessment report, the impacts of sea level rise measured in national GDP found that alongside islands in the Pacific – specifically Palau, Micronesia, the Marshall Islands and Nauru – the island group that would be most affected is The Bahamas. In 2020, Moody’s rating agency said The Bahamas was among the four nations forecast to be hit hardest financially by sea level rise, with an estimated 11 per cent of its residents and 15 per cent of its GDP at risk.”
Gerhardt’s book is in-line with predictions of the Bahamas seeing a 32cm (1.04ft) sea level rise by 2050 and 82cm (2.68ft) by 2100.
Climate Central informed that the majority of Grand Bahama, Abaco, and Spanish Wells is set to be under flood levels by 2050 and Crooked Island, Acklins, Andros and Cat Island will meet the same fate.
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