The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government’s fiscal deficit for the 2022-2023 first quarter was slashed by $116m year-over-year, it was revealed yesterday, with its revenues running 4-5 percent ahead of projections.

The Ministry of Finance, unveiling the monthly performance for September, the last month in the fiscal year’s first quarter, disclosed that the deficit - measuring by how much the Government’s spending exceeded its revenue income - shrank by 85 percent year-over-year compared to the same three-month period in 2021.

Aided by the economy’s continued post-COVID rebound, and prior year comparatives that coincided with continued pandemic-related restrictions, the data showed that the Government’s fiscal deficit shrank to just $20.5m compared to $136.5m the year before.

Simon Wilson, the Ministry of Finance’s financial secretary, told Tribune Business in a recent interview that the Government was “very close” to its Budget projections. “Revenues are slightly ahead, 4-5 percent,” he revealed. “Because July to September is our weaker quarter, we expect to see a pick-up in revenue some time around mid-November to December.

“We are hoping to finish the fiscal first quarter ahead of revenue targets. On the expenditure side, I think we’re running aligned with our cost forecast and are slightly below on expenditure. Spending is slightly less than anticipated. We don’t see any external shocks yet, as they could throw those numbers off.

“It’s the first quarter, and we’ve still got eight months to go, so we have to be cautious and watchful. It makes planning a lot more difficult, but overall we will have a smaller deficit for the first quarter than projected.” Mr Wilson added that the timing of bill payments, and when expenses come due, could also throw off monthly figures.

The Ministry of Finance, in a statement on the September 2022 performance, touted that VAT revenues were up by $33.4m or some 49.4 percent year-over-year at $100.9m for the month. “At end-September 2022, revenue receipts totalled $196.2m, representing a $20.8m (11.9 percent increase) over the $175.5m collected in the same month of the prior year,” it said.

“This positive performance is largely attributed to rebounds in tourism as compared to the prior year as well as improving domestic economic conditions. VAT collections firmed by $33.4m (49.4 percent) year-over-year. Similarly, taxes on international transactions and trade revenues improved by $6.8m, largely owing to a $3.9m increase in departure taxes.

“Owing to the reinstatement of allowances, increments, promotions and other benefits since the cessation of COVID-19 emergency orders, spending on personal emoluments increased $1.5m (2.3 percent) year-over-year. Other key areas of public spending included acquisition of goods and services of $44.3m, public debt interest at $29.6m and subsidies to government-owned and/or controlled enterprises of $18.6m to assist the health and education sectors as well as small business support,” the Ministry of Finance continued.

“Capital expenditure contracted by $4.3m (13.8 percent) to $26.7m. In total, aggregate expenditure contracted by $52.7m during the period to total $218.3m as the Government continued to enforce prudent management of expenditure during the month. The net result was a deficit of $22m, a $73.5m decrease from the deficit of $95.6m realised in the same period of the prior year.”

The Ministry of Finance, in its more detailed analysis, added: “Central government’s net debt increased during the period by $2.7m, and accounted for a 93.1 percent ($36.5m) decrease from the prior year, as a net result of $90.3m in borrowings and $87.5m in repayments.

“Proceeds of borrowings during the period totaled $90.3m, sourced by $50m in Bahamas Registered Stock, $30m in Central Bank advances and $10.3m in Treasury Bill placements. Repayments totalled $87.5m, primarily driven by repayments of $50m for Bahamas Registered Stock, $30m for Central Bank advances and $7.5m for foreign currency loans.”

On the revenue side, it added: “Revenue receipts totaled $196.2m, an 11.8 percent increase ($20.7m) year-over-year. Tax collections totalled $164.5m, supported by $100.9m in VAT receipts; $39.9m in international trade and transactions taxes; $16.6million in other taxes on goods and services; and $6.9m in property taxes.

“Non-tax revenue collections of $16.9m was explained by $15.9m from the sale of goods and services, and $15.7m in other non-tax revenue.” As for spending, the Ministry of Finance added: “Aggregate expenditure equated $218.3m, a 19.5 percent ($52.7m) decrease compared to the same period of the prior year.

“Recurrent expenditures fell 20.2 percent ($48.4m) compared to the prior year and totalled $191.6m. Capital expenditures declined 13.8 percent ($4.3m) to $26.7m and included $24.3m to acquire non-financial assets and $2.4m in capital transfers.”