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Economy Facing $1bn Bodyblow, Turnquest Tells House

Finance Minister Peter Turnquest.

Finance Minister Peter Turnquest.

By KHRISNA RUSSELL

Tribune Chief Reporter

krussell@tribunemedia.net

DESPITE a projected total economic fallout of as much as $1bn from the COVID-19 pandemic, the government has announced several relief measures for workers in the tourism industry who will be most affected by the virus’ global impact. 

Facing a reality that tourism will be massively affected, resulting in a halt of visitor arrivals, Finance Minister Peter Turnquest said yesterday the Minnis administration will provide a safety net for self-employed and those directly employed by the industry as the nation rides out this turmoil together.

The measures, the deputy prime minister said, are merely the government’s phase one response to the pandemic, as he stressed there were no plans at this time to borrow additional funding but he could not rule it out in the future.

The measures include $4m to provide food assistance and social support for displaced workers directly impacted by the virus and a $10m allocation for a temporary unemployment benefit through NIB for self-employed people.

Food assistance will come in the form of $100 vouchers every second week and will be disbursed through the Ministry of Social Services for people facing reduced work days for eight weeks. The unemployment benefit for self-employed tourism workers will be $200 per week for eight weeks.

The government has also requested that the Water and Sewerage Corporation reconnect all recently disconnected services for residential customers to ensure that personal hygiene is not compromised.

Both WSC and Bahamas Power and Light have been asked to defer payment of bills - for an initial period of three months - for residential customers who are diagnosed with the virus, who are in quarantine, or have been laid off, Mr Turnquest told Parliament yesterday.

He said the Minnis administration had also included the Clearing Banks Association in consultation on proposed mitigating measures. 

Small businesses will be offered short-term loan support as the government makes available $20m for this purpose.

“In keeping with our responsibility for sound governance, the Ministry of Finance undertook to model assumptions on the likely impact of the coronavirus over the next four-month period to mid-July 2020. We ran three scenarios – low, medium and high impact – based on assumptions of varying degrees of losses for tourist arrivals over a four-month period,” the East Grand Bahama MP said.

“The projections produced by these scenarios are by no means precise and all-encompassing, as the fallout in tourism will have a cascading impact on a number of other sectors within the domestic economy. However, the outcomes for each scenario within this preliminary assessment will help us to adopt a reasonable and responsible approach to contingency planning.

“While the total economic impact could be as low as $258m over the next four months to June 2020, we are inclined to focus on the higher impact scenario, which assumes 100 percent loss of cruise visitors and 80 percent of stopover visitors. In fact, recent developments in the industry would suggest a titling of the possible actual outcome to this extreme scenario, which could result in a total economic loss, including additional public sector spending requirements, of as much as $1 billion. Of this total, a dominant $832 million decline is projected for lost tourism related expenditure as a result of the reduced visitor count.

“The direct hit on government revenue is placed at an aggregated $108m — $48m for direct border taxes paid by visitors, and a total of $60m for potential VAT and imports duty losses.

“The expenditure requirements could reach $49m, of which we are funding $10m from dormant account fund. These resources would be used to address the health and social requirements arising from potential cases of the virus and dislocations associated with job losses and the need to support small businesses.”

The projected contraction in tourism activity will inevitably have an adverse impact on The Bahamas’ foreign exchange reserves position, which stood at a healthy $2.03bn at mid-March.

Based on preliminary projections, external reserves could decline by some $900m by end-2020. Under this scenario, the country would still have a manageable level of foreign reserves. However, the Central Bank will continue to monitor and judiciously manage the reserve holdings, he further revealed.

Other measures involve government reprioritising capital projects to increase the number of quickly deployable small-scale capital works to boost small business activity; accelerating the approvals process for all domestic and foreign capital investments projects currently in the pipeline; restricting all non-essential expenses including but not limited to travel, and the scaling down or postponement of planned events.

For his part, Tourism Minister Dionisio D’Aguilar said his communication would likely be one of the most painful speeches he would ever have to make at Parliament.

COVID-19, the minister lamented, has negatively impacted the strides and improvements the industry had made in 2019.

He said: “The Ministry of Tourism’s statistics indicate that with the record arrival of some 7.2m visitors in 2019 our industry had its best year ever. Our air arrivals grew by 6.7 percent, our cruise traffic grew by 10.3 percent and our total arrivals grew by 9.4 percent, unprecedented and historic. Despite slower than anticipated air arrivals in January 2020, overall arrivals had increased by 7.9 percent mostly attributable to cruise arrivals. When you discount the effects on Abaco and Grand Bahama, we were well on our way to an accelerated recovery in our other islands, vastly ahead of schedule.

“Until COVID-19’s rapid and uncertain spread throughout much of the world, our thriving tourism industry, the engine driving much of The Bahamas’ continued growth showed no signs of slowing down. We were poised for another year of success, another year of growth, another year of plenty.

“Which is why it pains me deeply to stand in front of you and recognise that around the world tourism is shutting down. The World Travel and Tourism Council estimates that some 50m jobs are at risk worldwide in the tourism sector. Global travel is set to shrink by 25 percent. Huge! And countries around the world including ours are actively closing their borders. Quite simply the tourism industry worldwide faces a significant, some would even say catastrophic, collapse in the near-term.”

He said the ministry’s forward booking data is showing “absolutely” no bookings for the foreseeable future as potential vacationers retreat into their homes worrying about the uncertainty of their own short-term economic prospects.

His comments came after the Bahamas Hotel Catering and Allied Workers Union predicted on Tuesday that all or most hotels in the country will place workers on reduced work day scheduling as visitor arrivals are expected to vastly decrease.

Comments

Well_mudda_take_sic 2 months, 1 week ago

"Governing" and "Borrowing" are synonymous for 'Candy Giveaway Man' Minnis and his favourite side kick confectioner Turnquest. You can just hear Minnis telling Turnquest: "Man, dis ain't no time for ya to be tellin' ma we run out of candy.....go find some more.....borrow, borrow, borrow!"

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