More than four months after Hurricane Dorian caused widespread devastation in the Bahamas, insurance projections say the government “will probably borrow $500 million” in the months ahead to deal with an estimated $3.4 billion in losses and damages.
According to a report published by the Insurance Journal on January 17, 2020: “The Bahamas may need to tap international debt markets as it confronts the steep cost of recovering from the most destructive hurricane ever to hit the islands.
The Caribbean nation’s Finance and Deputy Prime Minister, K Peter Turnquest is quoted as saying: “The government is weighing options for how it will raise the debt, with some combination of an international bond sale and local borrowing likely.”
Hurricane Dorian hit the Bahamas back in September 2019 and sat over the Caribbean Islands that resulted in widespread flooding and thousands of homes and businesses ripped apart.
The storm’s aftermath “wrecked the government’s fiscal plans, as it faces a slowing economy and the costs of reconstructing the islands so they can withstand the types of massive storms that have wrought devastation across the Caribbean in recent years”.
“In pure dollar terms this is absolutely the worst possible outcome and worst loss that we’ve ever seen,” Turnquest said .
“It is presenting a monumental challenge not only in terms of meeting reconstruction needs and costs but also for rebuilding in a way that is resilient and that will meet the anticipated frequency and severity that is being predicted as a result of this climate crisis.”
The storm wiped out parts of Grand Bahama and Abaco Islands, “which sit about 100 miles east of Florida in the Atlantic Ocean and make up slightly less than a fifth of the tourism-dependent $12 billion economy”.
“A revenue shortfall of about $230 million for the fiscal year ending June 30 and roughly $300 million in new spending is derailing its plans to cut debt levels,” the report said.
“The country was on a path to reduce debt to 50% of gross domestic product by 2024 from around 59% in 2018 by a steady tightening of budget deficits. Now, deficits are widening, and debt is expected to hover above 60% of GDP until 2024, according to government projections.
“Despite the disastrous storm, Bahamas debt returned 16.4% last year, ahead of the Bloomberg Barclays Emerging Markets USD Sovereign index’s 13% return, according to data compiled by Bloomberg.”
Minister Turnquest added: “The government expects ‘significant progress’ in rebuilding damaged areas this year, but it will take about three years before they’re fully restored.
“Reconstruction spending and inflows from insurance claims should help boost economic growth.
“A handful of major foreign investment projects remain on track, including a Disney Island Development Ltd facility worth between $250 million and $400 million, and one of Carnival Corporation’s largest cruise ports, planned for Grand Bahama, according to a government economic plan.
“Still, the government needs more investment and technical assistance to help it rebuild in a way that makes the islands less vulnerable to future storms, Turnquest said.
“Among other things, it wants to construct “resilient” infrastructure, renewable energy generation, disaster-resistant shelters, and to implement a payment system that will leave residents less reliant on cash, he said.
“We are looking to the international community not to turn away from this issue but to commit and invest and help us figure this out,” he said.
Meanwhile, cruise lines providing Grand Bahama Island calls in the wake of Hurricane Dorian, have all resumed service to Freeport.
According to the Bahamas Ministry of Tourism , 84 percent of the hotels and restaurants on Grand Bahama Island have reopened, as well as 75 percent of the tours and 55 percent of the attractions and watersports.
“Both cruise passengers and land visitors have plenty of excursions to choose from, including snorkeling, Jet Skiing, sailing trips, and beach visits.
“Both Silver Airways and Bahamasair resumed flights between Fort Lauderdale and Freeport in December 2019.”