The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government and governance reformers were yesterday in agreement that passage of the Fiscal Responsibility Bill must be "top of the docket" when Parliament resumes on September 19.

KP Turnquest, pictured, deputy prime minister, told Tribune Business that the legislation - intended to transform the Government's financial discipline - remained "right up there at the top of our priority list" - despite it not being tabled as planned before the summer recess.

His stance found favour with Matt Aubry, the Organisation for Responsible Governance's (ORG) executive director, who said the group was "talking to anyone we can" about the need for the Fiscal Responsibility Bill to be "first on the docket" of the Minnis administration's fall 2018 legislative agenda.

And these views were echoed by ORG's principal, Robert Myers, who told this newspaper that the credit rating agencies will "have a field day" if the Government "screws around any more" with the Bill's passage and enactment.

Moody's, in both its August 'credit opinion' and 'full country analysis' on the Bahamas, made clear its expectations that the Fiscal Responsibility Bill will be passed into law this "fall", viewing it as critical to reversing the financial deterioration that has resulted in multiple $300m-plus annual deficits and an $8 billion national debt.

"We consider that establishing these rules in law will be an important step towards strengthening the institutional arrangements that guide fiscal policy in The Bahamas," Moody's said of the Bill's contents.

"Moreover, equally important will be the government establishing a track record in terms of the reporting requirements set by the legislation, therefore enhancing transparency, and meeting the targets set in the rule."

And the Central Bank, in its July economic update that was released on Monday, also highlighted the Bill's role in the Government's ongoing fiscal consolidation programme as "key" to its success.

Mr Turnquest indicated the Government was fully aware of these expectations, and that the Bill's passage and implementation were critical to the Government fulfilling its side of the fiscal bargain through mechanisms requiring it to be more transparent and accountable over the use of taxpayers' monies.

Conceding that it was also critical to the Government's "credibility", following the 12 percent VAT hike and other Budget tax increases, he told Tribune Business of the Bill: "We're hoping to be able to lay that when Parliament gets back.

"I think it's right up there at the top of our priorities because it underlines the amount of commitment the Government has to fiscal responsibility and transparency, which is a significant philosophy of this government.

"It also gives the credibility to the consolidation plan we have put forth," the Deputy Prime Minister continued. "It's very important to get this through as it demonstrates and ensures we put in place the legislative teeth to support the plan we have."

Mr Turnquest had previously sought to bring the Fiscal Responsibility Bill to Parliament before the summer break, but other legislative initiatives delayed until this fall. He acknowledged it will be competing with multiple other Bills, including proposed laws to meet the European Union's (EU) anti-tax avoidance demands and address World Trade Organisation (WTO) accession-related issues.

ORG's Mr Myers agreed that the Deputy Prime Minister had foreshadowed "getting it done as soon" as Parliament returned, but warned it was critical for the Government to stick to this timetable to retain credibility with the likes of Moody's and Standard & Poor's (S&P).

"He knows they expect him to get it done," the ORG principal added of the rating agencies. "It's beyond the point where the Government can screw around with it any more. It's beyond the point where they can just keep talking about it. They've got to get it done otherwise the rating agencies will have a field day with it."

Mr Myers credited the Government for its public pledges to pass the Fiscal Responsibility Bill, but said the importance of such frameworks had been further emphasised by warnings that the fiscal projections for 2018-2019 would be impacted by the loss of gaming revenues through the web shops' just-launched court challenge.

The Fiscal Responsibility Bill is intended to lock the Government into specific deficit targets and longer-term debt ratios, while boosting transparency and accountability in the management of its financial affairs through enhanced public scrutiny. The latter role will be played by a newly-created Fiscal Responsibility Council, comprised of accounting, legal, financial analyst and business expertise from the private sector.

Mr Aubry told Tribune Business that ORG was continuing to press for "strengthening" of the Bill's sanctions/penalties for non-compliance, and an expanded role for the five-man Fiscal Responsibility Council beyond just oversight and advising the Government.

Arguing that it was "essential" for the Council to be a "proactive resource" in contributing to fiscal strategy and decisions, Mr Aubry said ORG planned to be "right upfront and centre" on the Bill's passage.

"We're really hoping, pushing, advocating and talking to anyone we can about this being first on the docket," he told Tribune Business of the Bill. "What's most encouraging is that the Financial Secretary is talking about adopting quarterly reporting standards, which is part and parcel of the Fiscal Responsibility Bill.

"We think it's very encouraging they are prepared to follow through in terms of the legislation as if it were passed, and make sure we get our fiscal house in order. We'll all breathe a little easier once the legislation is passed."

Mr Aubry said there seemed to be "a new level of accountability" within government over how taxpayer money was being used and distributed, but called for "all levels to be on the same page" when it came to sharing information and the Ministry of Finance holding all agencies to account.

"We all have a lot invested in this being done the right way," he said, adding that it was also critical for the Government to properly implement the Freedom of Information Act and pass two anti-corruption laws - the Integrity Commission Bill and the Ombudsman Bill.

"All of these contribute to the country's fiscal well-being," Mr Aubry added. "We're going to keep the pressure up."

The Fiscal Responsibility Bill's key targets require the Government to slash the fiscal deficit to 0.5 per cent from 2020-2021 onwards, cutting it from a sum equivalent to 5.8 per cent of GDP in the 2016-2017 Budget year. This means reducing it from near $700 million to around $54 million over a four-year period.

The Bill's 'first schedule' sets out a 'glide path' or 'road map' for achieving this, acknowledging - as the IMF stated - that "significant fiscal adjustments" are needed over the next two Budget years to hit this objective.

To enable the public sector and wider Bahamian economy "to achieve the fiscal objective in an orderly manner", and avoid unnecessary shocks, the Bill calls for 2018-2019 and 2019-2020 deficits that "shall not exceed" 1.8 per cent and 1 per cent of GDP, respectively. The first target is what the Government is going for this coming fiscal year, aided by the VAT hike.

The Bill also sets out a "long-term" target of reducing the Government's direct debt-to-GDP ratio from the current 58 per cent to "no more than 50 per cent". The year by which this target is to be achieved has to be set out in the Government's 'fiscal strategy report', which must be submitted to Parliament no later than the third week of November each year.