The Tribune

The Government yesterday launched consultation on two "landmark" Bills that are intended to transform how The Bahamas' public finances and national debt are governed and managed.

The Ministry of Finance, confirming that feedback on both the Public Debt Management Bill and Public Finance Management Bill is being sought by November 17, said the reforms will address "gaps and inconsistencies with international best practices" in the current fiscal stewardship framework.

With the initiative having assumed added importance due to projections that the national debt will breach the $10bn mark by June 2022 due to COVID-19, the legislative changes are designed to produce better governance, accountability and transparency in how the Government manages its finances.

The Bills attempt to more clearly defines the roles and responsibilities of the minister of finance and his top officials, while also strengthening the sanctions regime for public officials found guilty of misconduct with taxpayer money. The Public Finance Management Bill also brings state-owned enterprises (SOEs) under its oversight.

The same Bill will require individual ministries to prepare annual plans and reports, which must be tabled with the annual Budget, along with mid-year reports. An Internal Audit Committee will be formally established, and the Ministry of Finance said the Bill - once passed by Parliament - will be implemented in a phased approach given the need to "build capacity" in the public sector.

The Public Debt Management Bill, meanwhile, will legally codify the requirement for the Government to prepare and implement a debt management plan, along with a borrowing strategy. It will also provide a framework for the establishment of sinking funds and their management.

Both Bills had considerable input from external sources. The Ministry of Finance confirmed that the Public Debt Management Bill was drafted by the Commonwealth Secretariat, with considerable input from local stakeholders, and was also reviewed by the International Monetary Fund (IMF) and its local affiliate, the Caribbean Regional Technical Assistance Centre (CARTAC).

The latter also engaged the person who prepared the Public Finance Management Bill's initial draft, with the legislation developed over an 18-month period. Both Bills underwent a review to ensure they aligned with the Fiscal Responsibility Act.

"Currently, the legal provisions for the management of public debt in The Bahamas are spread across many statutes, namely the Financial Administration and Audit Act 2010; the Development Loans Act 1990; and the Bahamas Registered Stock Act 1973," the Ministry of Finance said of the Public Debt Management Bill.

"Apart from fragmentation, many of the legislative provisions have become outdated, and there are observed gaps and inconsistencies with international best practices for transparency and accountability in public debt management activities."

As for the Public Finance Management Bill, the Ministry added: "During the preparation of the Fiscal Responsibility Act 2018, a review was also undertaken of the Financial Administration and Audit Act, which identified significant weaknesses relative to acceptable best practices for public financial management.

"Given the extensive revisions required to address these concerns, it was agreed that it would be best to repeal the administrative provisions of the Financial Administration and Audit Act and draft a new public finance management law—one that was consistent with modern public finance management law and that would improve the effectiveness of the Government’s fiscal policy outcomes."

K Peter Turnquest, deputy prime minister and minister of finance, said in a statement: “The Financial Administration and Audit Act is a very outdated framework for public financial management.

"It does not have provisions governing cash management and forecasting, and it has inadequate provisions for public entity accountability, in-year fiscal reporting requirements and even on the specification of roles and responsibilities for fiscal management."

He added: "One of the pillars of the Resilient Bahamas Plan is to accelerate government reforms and strengthen our systems as we prepare for the re-opening of the economy. At the Ministry of Finance, we are doing this by advancing our legislative agenda to strengthen the overall fiscal management framework in the country.

“The Government’s debt activities are understandably of great public interest, and the legislative reform will strengthen the Government’s capacity to manage public debt effectively and provide mechanisms for more transparency and public accountability.

"It will bring about some long overdue changes like modernising the issuance of Government securities and establishing a framework for government lending and granting of guarantees."