The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The government injected $45.4m into the Grand Lucayan resort, including $13m to cover its operational costs, during the six months to year-end 2018, it was revealed last night.

The Minnis administration’s six-month “fiscal snapshot”, covering the first half of the 2018-2019 fiscal year, exposes the scale of the potential drain on Bahamian taxpayers if the government is unable to realise its goal of selling Freeport’s “anchor property” by the second quarter.

Analysing the government’s financing transactions and investments during the six months to end-December, the report said: “On the equity side, developments continued to be dominated by the government’s investment in the special purpose vehicle, Lucayan Renewal Holdings, formed to acquire the Our Lucaya properties in Grand Bahama during the first quarter of the fiscal year.

“For the first half of fiscal year 2018-2019 these investments totaled $45.4m—reflective of the original $32.4m in equity contribution alongside an additional $13m, for operational expenses.”

Elsewhere, the six-month “snapshot” noted that the public sector wage bill fell by 7.4 percent of $27.6m compared to the 2017-2018 first half, dropping to $345.8m. “At 89.1 percent of the total, wages and salaries were below the year-earlier spend by $19.9m at $153.7m, primarily explained by the timing of the execution of planned and budgeted recruitment exercises,” the report said.

“Allowances were reduced by $7.1m to $22.2m, partly due to timing-related factors in overtime payments to the security forces. Consistent with the tempered employment trends, the employer’s NIB contribution declined by $0.5m to $15.4m.

“Outlays on goods and services amounted to $222.2m, up $44.5m from the comparable period a year earlier, and were 36.9 percent of the budget. The largest component, special financing transactions, increased by $39.6m to $52.1m, and included nearly $42m in arrears payments.”

Turning to the government’s debt, the six-month “snapshot” added: “Public debt interest payments rose by $19.2m (13.6 percent) to $160.9m to position at 46.4 percent of budget. Of the total, $72.8m was on foreign currency obligations and the remaining $88.1m was for Bahamian dollar debt.

“Subsidies, constituting transfers to Government-owned and/or controlled units which provide commercial goods and services to the public, aggregated $168.8m—an increase of $28.1m (20 percent) from the same period in the prior fiscal year.”

Identifying the prime causes, the report added: “Transfers to public non-financial corporations, at $151.6m, exceeded last year’s spend by $28.1m. Approximately $110.6m or 73 percent of the total was directed to the Public Hospitals Authority - an increase of $27.2m over the comparative fiscal period.

“Some offsets were provided by timing-related reductions in support to the Water & Sewerage Corporation ($5.5m) and Bahamasair. Transfers to private non-financial enterprises were significantly higher at $16.8m from $4.2m in the corresponding review period. This outcome was boosted by arrears payments to cruise line operators and payments to a hotel property [Baha Mar] in the context of a Heads of Agreement.”

Focusing on other expenditures, the fiscal “snapshot” said: “Social assistance benefits, which could be in cash or in kind (medical services) totalled $23m - a gain of $5.3m from last year and approximately 46.4 percent of the budget. Continuing the observation in the first quarter, this outcome was primarily attributed to higher payments under the National Drug Plan Programme, of $6.3m to $10m.

“Pension and gratuity payments amounted to $64.9m, compared with $59.5m a year earlier, and approached 48 percent of the budget allocation. Spending on pensionable officers who either have reached normal or early retirement age, opted for early exit from the service or died while in the service, was $49.8m for a gain of $4.2m. Gratuity payments increased by $2m to $14.2m, which equated to 43 percent of the budget.”