The Tribune

By NEIL HARTNELL

TRIBUNE Business Editor

nhartnell@tribunemedia.net

THE PRIME Minister yesterday defended The Bahamas’ “first ever post-Independence” Budget surplus from Opposition charges it is a “fiction”, “false” and “empty” because it excludes the $311m in National Investment Fund (NIF) spending.

Philip Davis KC, unveiling the June and full 12-month performance for the 2025-2026 fiscal year in the House of Assembly, said he had merely “put the case” and laid out the actual financial numbers in a deliberate attempt to counter the doubting “Thomases” in the Free National Movement (FNM) and international credit rating agencies.

However, Kwasi Thompson, the Opposition’s finance spokesman, in both the House of Assembly and subsequently to Tribune Business, argued that the $39.3m Budget surplus unveiled yesterday has little to no credibility because the Government has not included the National Investment Fund spending in its fiscal calculations.

Michael Halkitis, minister of finance, had previously told Parliament the near-$311m outlay from the Fund had been spent on infrastructure such as airports, roads, water systems and court complexes to the Bahamian people’s benefit. Given that this is typical capital spending for the Government, Mr Thompson said there is no good reason why it was stripped from the fiscal numbers.

Its inclusion, he argued, would have driven the Government instead into a $270m-plus deficit for the 2025-2026 fiscal year that closed at end-June. However, Mr Davis stuck firmly to his and the Government’s position that it has achieved the “first fiscal surplus recorded in an independent Bahamas”, meaning that tax and total revenues collected exceeded public spending in those 12 months.

The Ministry of Finance’s report for June 2026, which also includes the full-year figures, shows that the $39.3m annual figure was ultimately achieved by a more than five-fold increase in the Budget surplus for that month - from $25.4m in 2025 to $130.7m this time around (see other article on Page 1B).

The increased June surplus was achieved following major jumps in both revenues and spending. The Government’s total tax income more than doubled for the month, increasing by 116.7 percent or $307.2m year-over-year to hit $570.5m, while non-tax revenue surged by $159.8m to hit $206.6m.

Revenues, though, grew at a faster rate than the Government’s fixed-cost, or recurrent, spending on civil service wages, rents and debt servicing, which also more than doubled in June to increase by 103.8 percent or $279m to hit $547.6m. Capital expenditure also surged, expanding by $82.7m year-over-year to hit $98.7m for June 2026.

June has traditionally, prior to the past two fiscal years, been a month in which the Government runs a large deficit due to ministries, agencies and departments suddenly presenting bills that the Ministry of Finance knew nothing about in a bid to clear them before year-end.

Mr Thompson yesterday voiced scepticism that the Government has bucked, and reversed, this historical trend on the basis that the June 2026 and year-end figures do not appear to include the near-$311m spent by the National Investment Fund, which remains an ongoing source of controversy.

“It is, in fact, a fiction,” he told Tribune Business of the touted $39.3m Budget surplus. “It does not account for all of the Government’s spending that it should account for. There’s no difference in the type of spending [by the Fund]. It is actually capital spending. There’s no reason why it should not have been accounted for in the Budget.

“The surplus is a fiction. The real picture that the Government should take away is that it is a fiction.” Mr Thompson then asserted that Bahamians are far more concerned with constantly-escalating living costs; the state of education, healthcare and public infrastructure; and whether public servants are being paid what is due, than whether the Government has a Budget surplus.

“What the public is also focused on is a government that does not pat itself on the back for a fictional surplus, but the hospital in the state that it is, healthcare being in the state that is is, schools being in the state that they are, nurses still needing to be paid, police officers still needing to be paid,” the east Grand Bahama MP said.

“These are the things the public is interested in. People are still suffering with the cost of living, still suffering with the cost of fuel, cost of gasoline, cost of diesel. Inflation is continuing to rise. We do not share in the Government’s fictional surplus.”

Mr Thompson added that the “massive amount of confusion” surrounding the National Investment Fund - including whether the Government deposited some $700m in net borrowing proceeds into it - “has put the Government in a position where it lacks credibility” over the 2025-2026 fiscal numbers.

“The public just does not believe them,” he added. “The public is far more interested in the Government fixing the hospital, fixing the roads, fixing the schools, than celebrating a fiscal surplus.”

Mr Davis, though, in unveiling the fiscal numbers denied that he was celebrating and acknowledged that “the seas ahead may well be rough” given the increasing global uncertainties outside The Bahamas’ control - continuing wars in Ukraine and the Middle East; Donald Trump’s tariff and trade policies; surging global oil and fuel prices; and rising US and global interest rates.

Comparing The Bahamas’ public finances to a mail boat, the Prime Minister conceded that rebuilding fiscal headroom is not done, asserting: “I do not come to this House in a spirit of celebration. The voyage is not complete, and a responsible captain does not mistake a calmer stretch of water for the safe harbour.”

Affirming that his administration is “conscious every day” of the cost of living pressures faced by Bahamian families, he added that all citizens will benefit from putting the country’s public finances in order - especially during times or crisis and disaster.

Mr Davis also noted that $674.7m was sucked away on interest payments to service The Bahamas’ national debt during the past 2025-2026 fiscal year, reducing funding that can be directed to key public services such as health, education and the Royal Bahamas Police Force.

“A stronger fiscal position also means that when the next hurricane season brings hardship, as it eventually will, the Government will be able to support recovery without resorting to costly emergency borrowing. And a country with credible public finances continues to attract the investment that creates employment for Bahamians,” Mr Davis added.

“The Government will continue to modernise revenue administration, to reform public enterprises, to reduce the cost of the national debt, to improve the transparency of fiscal reporting, and to invest in the infrastructure of every island.”

However, Mr Thompson argued that Mr Davis had attempted to do a “victory lap” over what he argued was a non-existent Budget surplus due to “an outstanding question on the $700m with respect to the National Investment Fund”.

Recalling Mr Halkitis’s confirmation that there has been almost $311m in capital investments spending from an account, or accounts, bearing the National Investment Fund’s name, the Opposition’s finance spokesman said: “The same type of expenditure - capital expenditure - in the Budget that $310m is not included in the Budget process.

“When you announced a surplus, you can stand up, start patting yourself on the back and say we got a surplus, but you have not taken account of all the spending. You have not taken account of the $310m spent. If you don’t take account of that, it’s a surplus on paper but, in reality, you are still operating in deficit.

“To say you have a surplus, in my view, does not matter a lot when you have failed to take account of all your spending. It’s a false surplus. It’s not generated an entire picture being put before the country.” Mr Thompson also challenged whether the Government had “withheld” paying bills due to Bahamian vendors, and kicked its payables over into the current fiscal year, to ensure a surplus.

Reiterating that public officials feel being paid what they are due is “far more important” that celebrating a Budget surplus, Mr Thompson also renewed the Opposition’s call for the Government to “cap” the VAT it is earning on gasoline and diesel sales to give Bahamians relief from skyrocketing fuel prices.

“I believe those people who have to pay for fuel would rather you have capped VAT than you come here and you celebrate a surplus,” Mr Thompson said. “The cost of living continues to hammer our people. Inflation continues to increase…

“You didn’t account for the $310m you spent. You didn’t account for it. It’s the same type of spending, and you deliberately did not include it when you accounted for your surplus. You intentionally did not include it in your surplus.” This drew Mr Davis’s first intervention, telling Mr Thompson “I expect better of you” and signalling he would never tell the Bahamian people untruths.

And, in a clear dig at Opposition leader, Michael Pintard, and his book, he retorted: “I’m not dumb. I’m not like you at all. I don’t play politricks. The very least I would have expected of you is to understand what the surplus is in the context of our [modified cash basis] accounting system.”

Mr Davis, suggesting that Mr Thompson was being disingenuous by referring to the Government’s debt, and adopting accrual-based accounting treatments not used by the Government, added: “I don’t consider this a celebration. I put the case because of the Thomases around here, including yourself, including the international agencies, who said what we have done is remarkable.”

Mr Thompson, though, stuck to his concerns that the Budget surplus is an “empty” one because the figures do not include the $311m in National Investment Fund spending. The Prime Minister, in reply, said he would leave the Public Accounts Committee’s investigation to address any concerns over this outlay, prompting the east Grand Bahama MP to voice “credibility” fears.

He was then joined by Mr Pintard, who branded the 2025-2026 Budget surplus as “contrived. It’s fiction” given that the spending occurred from accounts controlled by the Ministry of Finance and Public Treasury, but was not included in the Budget calculations. “It’s a fiction; absolute fiction,” the Opposition leader added.

Mr Davis, having the last word, said: “The numbers are there. He’s calling it fiction. The numbers are there, and they are not going to lie. He needs to sit down and be honest with himself.”