The Tribune

By LEANDRA ROLLE

Tribune Staff Reporter

lrolle@tribunemedia.net

ECONOMIC Affairs Minister Michael Halkitis anticipates that government borrowing will be “significantly less” for the upcoming fiscal year compared to last year due to increased revenue amid the country’s rebound from the COVID-19 pandemic.

The minister made the remarks when asked yesterday what Bahamians could expect ahead of the budget debate for the 2022/23 fiscal year. The debate usually begins in June and the new fiscal year takes effect on July 1.

“What happens is this, in every budget, there’s what we call a borrowing resolution which is a borrowing authorisation which authorises the government to borrow money for the upcoming year,” he said.

 Last year, the Minnis administration tabled a resolution in the House of Assembly for the government to borrow $871,645,371 for the 2021/22 fiscal year. Another resolution was also tabled to allow the former government to borrow an additional $68m beyond what was approved for it to borrow in the 2020/21 year.

 However, Mr Halkitis said yesterday the Davis administration does not anticipate using all of what Parliament authorised the previous administration to borrow last year, adding that borrowing will also be significantly less for the upcoming fiscal period.

 “So, in 2021, a resolution was passed, authorising all of the borrowing and as you move through the year based on your cash flow and needs, you exhaust that borrowing resolution. We don’t think that we will use all of the authorisation. In fact, we think that we might have to borrow less than what was originally authorised, and we will know as time goes on.

“But, we’re almost there and we have about a quarter left and we would make all that information available and at the budget time, we would have a new authorisation for the upcoming year which we expect will be significantly less than last year.”

 Asked yesterday how much the Davis administration expects to borrow for the upcoming fiscal year, Mr Halkitis declined to answer, saying officials were still in the process of ascertaining the true extent of funds owed by the nation.

 He also predicted a smaller deficit than what was originally forecast for the 2021/2022 fiscal year – projected at $951.8 million.

 “I don’t want to give a number, but our revenue is strengthening with the opening of the economy and the rebound of the economy and the relaxation of the restrictions, etc,” Mr Halkitis added. “That’s good but on the flip side, there’s a lot of hang over in terms of expenses and bills and stuff so happily the revenue is performing, but there (are) still a lot of bills that we have to liquidate.

 “And so, I don’t want to give you a number but we’re trending in the direction where we’ll come in less than the deficit that was originally forecast and more importantly, looking ahead we expect to have a significantly less borrowing requirement going to the 2022/23 budget.”

 As it relates to possible tax reductions, Mr Halkitis said: “We consider it because, like I said, the business community are constantly writing us, suggesting things. I know of some that I have already received where again, if the rates are too high and it makes it non-competitive and it defeats the purpose then they would put in a submission, they would defend it and I would say, ‘okay, we would consider this’ and we sit down with our budget people, our customs people and then make a decision so it’s a normal part of the budget process that we do.”

 Prime Minister Philip “Brave” Davis told parliamentarians earlier this month the government was headed in the right direction away from a “fiscal cliff”, despite nearly $1bn in liabilities and unfunded obligations left behind by the previous administration.

 Unfunded obligations, he said, include $255.3m in debt and interest payments related to the government taking over Bahamas Power and Light’s legacy debt and $155.5m in unpaid bills and other obligations for state-owned enterprises.

 Other debts, he added, include $25.7m for the Ministry of the Public Service, which largely represents outstanding payments for insurance services, along with $17.7m for the Office of the Attorney General to settle outstanding legal claims.

 Mr Davis also ​highlighted $23m in bills for water purchased by the Water and Sewerage Corporation; $56m for the Public Hospital Authority and $34.2m for the Ministry of Tourism, including a significant number of unpaid bills for Bahamasair.

 Despite the country’s ​ballooning debt, Mr Davis has insisted that his administration would not increase taxes or fees on Bahamians in the short-term.