The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

MINISTER of State for Finance, Michael Halkitis, said yesterday that the Government is projecting an increase of about 5 per cent in recurrent revenue for the 2012-2013 fiscal year based on expected economic growth and improved revenue collection.

Mr Halkitis told Tribune Business yesterday: "For total revenue we are projecting $1.55 billion in collection, as opposed to $1.45 billion, so in effect we are projecting that we will collect 5 per cent more than we collected last year.

"Overall, we are projecting a slight increase in income of about 5 per cent. Within the various different heads there might be adjustments because of some of the things we did in terms of reducing some of the taxes, but overall we expect to improve our efforts in collection as well as growth of the economy ."

Mr Halkitis added: "We see the International Monetary Fund (IMF) is projecting that the Bahamian economy will grow about 5.5 per cent, and so our projections are based on that.

"We project that we will collect 5 per cent more, which is consistent with what is expected from the growth in the economy. We think it can happen with economic growth and our efforts in terms of modernisation, collections, modernising the Customs department, Road Traffic and those other revenue agencies. We have to work hard, but we think we can do it and raise the revenue."

Mr Halkitis noted that the IMF projects that nominal GDP in the Bahamas will grow by 5.4 per cent in 2012-2013. During his closing contribution to the 2012-2013 Budget, he said: "That comprises two components, namely: An expansion in real GDP on the order of 2.6 per cent during the fiscal year and an increase in the GDP price index of some 2.8 per cent. On the basis of this projection, nominal GDP in the country is forecast to rise from $8.019 billion in 2011-2012 to $8.454 billion in 2012-2013, for an increase of $435 million."

Mr Halkitis added: "At the current time, based on the projected outturn for 2011-2012, recurrent revenue amounts to some 18.1 per cent of GDP, or $1.45 billion.

"In developing the projection for recurrent revenue for 2012-2013, one may thus begin with a so-called 'status quo' forecast on the basis of the previous year's performance of revenue relative to the size of the economy. By applying the projected 2011-2012 ratio of 18.1 per cent to the IMF forecast of nominal GDP in 2012-2013 of $8.454 billion, we arrive at a status quo forecast for recurrent revenue of $1.53 billion."