The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Deputy Prime Minister yesterday pledged that the Government's planned Fiscal Responsibility legislation will make it "near impossible" to repeat its predecessor's $234 million pre-election deficit spending binge.

K P Turnquest, sticking by his $500 million deficit projection for the 2016-2017 fiscal year, said the Central Bank's latest report "absolutely" showed the extent of the Christie administration's efforts to ensure it retained power.

He said anti-corruption and Fiscal Responsibility legislation will be the first two areas addressed when Parliament reconvenes in September, adding that the Minnis administration was "very serious" about following through on these initiatives.

Speaking after Central Bank figures appeared to show $234 million was added to the fiscal deficit during this year's second quarter, which included the general election, Mr Turnquest said: "We've announced we're going to be implementing a suite of Fiscal Responsibility legislation.

"That is going to make it near impossible to do this kind of thing. We're very serious about that, and we recognise that if we don't get it right, and don't get it right in the near term, that has significant consequences for the way forward."

Tribune Business revealed yesterday how the numbers in the Central Bank's May report show a $234 million was incurred in the three months to end-June 2017, based on the new government's $500 million full-year deficit projection.

The report shows the former Christie administration actually contained the 'red ink' during the first three months of 2017, even posting a "small surplus" of around $10 million for its Budgetary operations over that period.

But, given that the Central Bank pegged the nine-month deficit at $265.9 million, the new administration's $500 million full-year estimate suggests the Government spent $234 million more than it took in during the three months to end-June 2017.

Mr Turnquest yesterday agreed that this was the only "conclusion" that could be drawn, especially since former prime minister, Perry Christie, had projected a full-year deficit of $350 million when delivering the mid-term Budget in late April.

"If you look at their own statement in March [April], and compare that to where we are, you would have to come to that conclusion if you are to take them at their word," the Finance Minister said of the former administration.

"The reality is that if we continued the way we were going, we may have had some issues."

Some observers, speaking privately to Tribune Business yesterday, suggested the Central Bank data also called into question the Minnis administration's $500 million deficit estimate for the 2016-2017 full year.

They pointed to the Budget surpluses generated in March ($27 million), and for the first quarter as a whole, as evidence that the former government was clawing back some of the damage inflicted by Hurricane Matthew.

However, Mr Turnquest said the Government was "still on track" to produce a $500 million deficit for the fiscal year that closed on June 30.

He added that while the former Christie administration's fiscal intentions and plans may have been correct, "execution and a lack of discipline, particularly in the last period", resulted in it adding $2.2 billion to the national debt during its five years in office.

Bradley Roberts, the PLP's chairman, was the only one to respond to Tribune Business's revelations, describing them as a "bit of salacious nonsense" in a statement yesterday evening. However, he did not dispute the Central Bank's figures or the meaning of their data.

Neither Chester Cooper, the PLP's finance spokesman, nor Philip Davis, the Opposition's leader, returned Tribune Business's phone calls and e-mails seeking comment before press time last night.

Mr Turnquest, meanwhile, said the Minnis administration was relying on its promised Fiscal Responsibility legislation to prevent similar pre-election hiring and contract signing binges in the future, including by itself.

"We have a lot of legislation in the pipeline here that we'll be developing over the summer," he explained, "so beginning in the fall there's a whole slew of initiatives we want to take.

"The first part of the year, or latter half of this year, we will be focused on anti-corruption type legislation, and passing some laws to control corruption. Then we'll move into this Fiscal Responsibility legislation and, moving forward, go into revenue enhancement and economic incentive legislation."

Mr Turnquest previously told the House of Assembly that the proposed Fiscal Responsibility legislation would target an annual GFS 'balanced Budget', meaning that the goal is to add no new debt to the existing $7-billion plus national debt.

The Government's other objective would be to maintain "a desirable and sustainable" debt-to-GDP ratio, Mr Turnquest said. To underpin this, the proposed law would require the Government to set out the assumptions underpinning its annual Budget, along with its longer-term fiscal targets.

Explanations would also have to be provided if Budget targets for prior years were missed, while short-term fiscal targets will have to be placed in the context of the Bahamas' long-term objectives.

Mr Turnquest suggested that targets could also be set for some components of the Government's fixed-cost spending, such as the civil service wage bill, while plans and timelines for eliminating any deficits will also have to be laid out.

The Central Bank, meanwhile, has also adjusted its position on the Bahamas' fiscal outlook, warning that near-term prospects for reducing the deficit have become bleaker due to the bloated civil service wage bill.

"Medium-term fiscal consolidation prospects remain dependent on the success of measures to enhance revenue administration and curb expenditure growth," it said.

"However, the near-term prospects of a deficit reduction have lessened, owing to increased expenditure commitments from salaries and ongoing recovery costs from Hurricane Matthew."