Projected Contraction in Tourism Activity to have Adverse Impact on the Bahamas’ Foreign Exchange Reserves Position

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Deputy Prime Minister and Minister of Finance the Hon. Peter Turnquest stated that the projected contraction in tourism activity will inevitably have an adverse impact on The Bahamas’ foreign exchange reserves position, which stood at a healthy $2,030 million at mid-March 2020. “Based on preliminary projections, external reserves could decline by some $900 million by end-2020, DPM Turnquest explained as he presented the Statement on the Fiscal and Economic Impact of COVID-19 in the House of Assembly, Wednesday, March 18, 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 said the Ministry of Finance will support the measures that the Central Bank adopts to ensure that the country’s foreign reserve holdings remain adequate for ongoing financial and commercial needs.

Government
Package of Policy Measures to Deal with Economic Impact of COVID-19

The DPM explained that the Government has adopted a package of policy measures to deal with the tremendous economic impact of COVID-19 that is already starting to be felt as hotel occupancies have fallen, as cruise ship arrivals are on a 30-day hiatus, and as hotel workers are being asked to take unpaid or vacation leave. “These provisions have been put in place first and foremost to protect public health. They will also provide a safety net for individuals as we ride out this turmoil together.” He stated that in addition to the nearly $5 million the Government has already earmarked for healthcare response, we are allocating up to an additional $11 million to cover detection, isolation, treatment and other COVID-19 mitigation activities.

DPM Turnquest said the Government is setting aside $4 million to provide food assistance and social support for displaced workers directly impacted by the virus, through the Ministry of Social Services. “These food assistance vouchers, of $100 every second week will be targeted primarily to persons within the hospitality industry who are facing reduced work weeks.” He also explained that the Government is allocating $10 million to provide for a temporary unemployment benefit, administered through the National Insurance Board, for self-employed persons working in the tourism industry. “Self-employed persons, such as straw vendors, tour operators, Jet Ski operators, do not ordinarily qualify for the National Insurance unemployment benefit as part of their benefits package.

“However, the Government is making a special accommodation for those self-employed individuals in the tourism industry, given the unprecedented COVID-19 impact.” The DPM added that for persons in this category, the Government will offer a sponsored unemployment assistance of $200 per week, for up to eight weeks. To qualify, these self-employed persons must be currently registered with NIB or they must register at the time of application for this benefit. The time frame for this benefit may be adjusted according to need. He said under the normal provisions of the NIB insurance scheme, individuals who contract COVID-19 or are quarantined because of exposure or suspected exposure will be eligible for sickness benefits. DPM Turnquest added that individuals who are temporarily laid off because of the economic impacts of COVID-19 will be eligible for unemployment benefits, up to the regular 13-week period, if necessary.

“NIB published information on this yesterday to remind persons of these benefits already available to them under the NIB programme. The government encourages all persons who are eligible to contact NIB.” He explained that the Government has requested that Water and Sewerage reconnect all recently disconnected services for residential customers to ensure that personal hygiene is not compromised. “Further, the government is also directing both Water & Sewerage and BPL 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. “I must stress that this allowance is for this specific group of persons and that it is important that these impacted persons contact BPL and Water & Sewerage to register for this benefit and verify their situation as necessary.”

He said the Ministry has included the Clearing Banks Association in its consultation on the proposed mitigating measures to address the current situation. “The banks have reiterated to me their commitment to helping their clients through challenging times. They have advised that if persons are experiencing financial difficulties during this period, that they should contact their banks to understand the options that are available to them, such as payment deferrals, credit limit increases, or other measures to offer temporary relief. “As this issue progresses, the banks have stated their intent to offer more tailored products and services to persons who financially are negatively impacted by the economic effects of COVID-19.” The DPM said, “The banks have however stressed that for now, it is important that clients who – because of their changing circumstances – find themselves in financial duress, that these customers should go in before they fall into arrears so that their specific situation can be assessed and addressed within the range of the banks’ available tools.”

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