The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ national debt remained larger than the size of the country’s economy at year-end 2021, it was revealed yesterday, standing at a sum equivalent to 100.3 percent of gross domestic product (GDP).

The Central Bank, unveiling its quarterly economic review for the three months to end-December 2021, pegged the national debt - which includes the Government’s direct debt as well as that it has guaranteed on behalf of state agencies - at $10.717bn.

While the rate of national debt growth was easing, the monetary policy regulator said: “The direct charge on the Government grew by $230.9m (2.3 percent) over the quarter, and by $900m (9.6 percent) on an annual basis, to $10.318bn at end-December 2021.... The Government’s contingent liabilities decreased by $2.2m (0.5 percent) over the three-month period, and by $40.9m year-on-year, to $399.1m.

“As a result of these developments, the national debt - inclusive of contingent liabilities - rose by $228.7m (2.2 percent) over the previous quarter, and by $859.1m (8.7 percent), on an annual basis, to $10,717bn at end-2021. As a ratio to GDP, the direct charge increased by an estimated 1.5 percentage points on a yearly basis to 96.6 percent at end-December. In addition, the national debt-to-GDP firmed to an estimated 100.3 percent compared to 99.5 percent in the same quarter of 2020.”

Prime Minister Philip Davis QC, in presenting the mid-year Budget in the House of Assembly recently, suggested the debt ratio had dropped below 100 percent. However, he appears to only have been using the Government’s direct debt, which the Central Bank pegged at 96.6 percent, and excluded the Government’s contingent liabilities rather than employing the broader national debt measurement.

And the 96.6 percent ratio was still higher than the 95.1 percent direct government debt-to-GDP position attained by the Minnis administration at year-end 2020. Meanwhile Senator Michael Halkitis, minister of economic affairs, yesterday said the Government’s revenues for December 2021 and January 2022 had either exceeded, or were close to, their pre-pandemic comparatives.

“While in Opposition, we contended that the curfews and lockdowns did little to prevent COVID-19 spread and only stifled our economic rebound,” he told the Senate. “In November 2021, the Government eliminated the then-existing emergency orders, which imposed limitations on the movement of persons and curfews, restricting the hours of business operations.

“Based on preliminary data from the Treasury, shortly after eliminating emergency orders, government tax receipts in December 2021 immediately rebounded to $202.1m, far beyond pre-pandemic levels of $167.8m in December 2019. Similarly, January 2022 government revenue firmed to $232.1m, in line with the $234.9m posted in January 2020 before the onset of the pandemic.

“The point is madam president, The Bahamas is late out of the gate again. Imagine the suffering that could have been alleviated, the pain that could have been quenched, and the cries that could have been answered if the Government at the time had only listened and ended these cruel emergency orders sooner.”

The December 2021 revenue total is thought to have been boosted by the receipt of some $24.5m in dividends from the Bahamas Telecommunications Company (BTC) on the Government’s 49 percent stake, a one-off transaction. Still, the Government’s revenue for the month would have remained ahead of pre-COVID comparisons.

Data released by the Ministry of Finance yesterday showed a net $9.3m increase in the fiscal deficit in January 2022, taking the total for the first eight months to $288m or 33.5 percent of the projected full-year ‘red ink’. The $232.1m in revenues was exceeded slightly by $241.5m in expenditure.

The Government’s debt decreased by a net $58.9m during January 2022, with some $52.3m in new borrowings exceeded by $111.2m in repayments.