The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

A Bahamas-based risk management consultant is “cautiously optimistic” the Government will achieve its $1.3bn revenue increase, but conceded: “It’s not going to be easy to reach.”

Hubert Edwards, principal of Next Level Solutions, told Tribune Business that the Government must immediately implement the necessary reforms if it is to increase annual revenues from just over $2.3bn to more than $3.6bn in just four years.

Speaking after the Government’s Fiscal Strategy Report projected a 55.7 percent increase in government revenues by the 2025-2026 fiscal year’s end, along with a $71.9m Budget surplus by 2024/2025, said: “It’s a really interesting position, but I think we must bear in mind that the $1.3bn difference is kind of three to four years out, and it’s not going to be easy to reach.

“But I believe that, in order to make that assessment, you have to make a full analysis of the Fiscal Strategy Report. If you go through the document, one of the things that you’re going to find is, starting with the release letter, it said in very clear terms that the economic health of the country is in a perilous state. So, there’s a recognition that things are bad, and then it goes into delineating a number of areas for reforms.

“So, the question then becomes if these things are done, and if they are done effectively, with sufficient time, then there is a possibility that you could see a trend in revenue over the next couple of years. But that would assume that The Bahamas is now shifting into a growth mode, and how GDP obviously has to be growing in order for you to get that type of a buoyancy.”

Simon Wilson, the Ministry of Finance’s financial secretary, said unspecified “new tax measures” will be required to achieve that $1.3bn revenue increase, although the majority of this rise will come from greater enforcement and compliance.

As a result, Mr Edwards asked if there “will there be an increase in current taxes, or will there be new taxes”. He added: “I am of the view that the direction which has been articulated by the administration, largely by the Prime Minister, of reaching the 25 percent benchmark of revenue-to-GDP, will require increases in taxes in some way, shape or form.

“I don’t believe that the taxes that currently exist, at the levels that they currently exist, by themselves will ever will get you to the $1.3bn. If the country doesn’t start to realise additional revenue growth, then the type of remedial actions which are necessary for our loan and our debt portfolio are not going to happen. Here is why.If you look over the last couple of years, and even the last fiscal year, we ran a primary deficit.

“So that means even before you even account for interest rate payments, you’re already in a deficit position. So really, the only way the country is going to progress and move forward and deal with its debt is if the Government has additional revenue and starts to get to the place where it’s easily covering its debt servicing obligation. That may definitely mean some increases in taxes at some place and time.”