The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has little to show for $3 billion of borrowing and increased tax revenues, an FNM candidate charged yesterday, describing as “egregious” its persistent failure to hit fiscal targets.

Dionisio D’Aguilar, the FNM’s Freetown representative, told Tribune Business that Bahamians “can’t see where the money’s gone”, as he accused the Christie administration of being “always wrong” in its annual Budget deficit projections.

He argued that Prime Minister Perry Christie’s presentation on VAT to Parliament last week had given precious little detail on how the Government’s ‘revenue windfall’ had been used, despite suggestions it had reduced total deficit spending by $500 million over the past three years.

“The bottom line is that they’ve spent the money,” Mr D’Aguilar argued. “They know where they’ve spent the money, but they want to keep it as vague and elusive as possible.

“You can always come up with 1,000 reasons to spend money, and they [the Government] clearly have, but as Bahamians look around they can’t see where it’s gone.”

Tribune Business’s own research previously revealed that despite VAT’s introduction on January 1, 2015, the Christie administration will have increased the national debt by more than $2 billion during its current term in office.

It criticised the previous Ingraham government for adding more than $1.5 billion to the national debt during its 2007-2012 term in office, but official Budget data shows that the $310 million deficit incurred in 2015-2016, and the $350 million now projected for the current fiscal year, will take the Christie administration’s total deficit spending to $2.067 billion.

As a result, Mr D’Aguilar said the Government had little to show for $2 billion-plus in borrowing, plus $1.14 billion in gross VAT revenues during the tax’s first two years, other than a national debt that now exceeded $7 billion.

“The PLP tried to make the case the FNM was fiscally irresponsible, but the evidence shows they’re fiscally irresponsible,” he told Tribune Business.

“What is most egregious is if you look at the past Budget, the deficit for this year was initially supposed to be $74 million two years ago. In the 2016-2017 Budget they projected it would be $100 million, so they’ve eased it up.

“Now they’re estimating it will be $350 million. They’re always wrong. It’s [the deficit] always way more than they say it’s going to be. It’s never right. I can understand it being off by a little bit, but I’m not buying this Matthew thing.”

The Prime Minister, in unveiling the mid-year Budget last week, blamed the projected 250 per cent increase in the 2016-2017 full-year deficit solely on Hurricane Matthew, which he said had delivered a $300 million blow to the Government’s finances.

The Christie administration has also blamed the $105 million worth of damages resulting from Hurricane Joaquin, which struck in October 2015, for a 2015-2016 deficit that ended up at $310 million, as opposed to a forecast $150 million.

However, recent Central Bank reports have revealed that the increased 2016-2017 deficit is also a result of greater recurrent (fixed cost) spending, due to outlays on social programmes such as National Health Insurance (NHI).

And the Government was already missing its deficit projections prior to the hurricanes, having projected $196 million worth of ‘red ink’ in its 2014-2015 Budget, only for the final outcome to come in at $381 million.

Mr Christie gave no explanation as to why the Government’s fiscal and deficit forecasts have been so consistently off by such wide margins throughout its term in office, or for why the pace of fiscal consolidation has been much slower than projected.

However, the Government’s new website, understandingVAT.org, makes it clear that the new tax is financing spending on programmes it sees as essential, as well as helping to narrow the deficit.

“Governments have to make hard choices. An important goal is to reduce our country’s debt, but at the same time we have to continue to invest in people and make the changes we need to improve our security and our economy,” the Government explained.

“If we cared only about reducing the debt, we would not be funding new scholarships, building new sports stadiums, fixing roads and docks, or introducing National Health Insurance, for example. But all these things are important to a nation’s health and well-being.”

Mr D’Aguilar yesterday acknowledged that investing in people was important, but not at the expense “of bankrupting the country”.

“They’ve not been guarding the people’s money, and spending it wisely, prudently and economically,” he told Tribune Business.

“They say they’ve been investing in people, I get that, but not to the point you put the country into bankruptcy. If the economy is not growing you have to adjust, and they [the Government] will make us bankrupt at some stage.

“That’s why they’re dangerous. Dangerous as hell. For the good of the nation, they have to say we can’t go bankrupt. The repercussions of that are far more than the benefits they will gain from re-election. Don’t put re-election first; put the country first.”

Mr D’Aguilar also urged the Government to focus on growing Bahamian GDP and the private sector, arguing that the latter’s ability to generate jobs and economic expansion was the only escape route from the present fiscal crisis.”