The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government is "very confident that we have covered" the $300m external US dollar bond due to mature in mid-January 2024, its top finance official said last night.

Simon Wilson, the Ministry of Finance's financial secretary, told Tribune Business that funding has already been set aside to cover the payout that is coming due. He indicated that the $300m will be partially redeemed, and another portion rolled over or refinanced.

"The plan is that we have put aside the funding for that," he said. "We feel very confident that we have that covered. We feel very confident, and that will be managed accordingly."

Mr Wilson spoke after the Ministry of Finance's report for the 2022-2023 fourth quarter and full-year, released yesterday, disclosed that the Government has made good on its pledge to finance the so-called 'sinking funds' created to accumulate monies for the redemption of The Bahamas' foreign currency debt with collected tax arrears. A fourth such fund has been set-up using monies obtained from delinquent taxpayers.

"During the quarter, contributions made to the 'sinking funds' established to retire future debt obligations totaled $87.9m. Such contributions are inclusive of those made to a fourth 'sinking fund' recently established with proceeds from the collection of tax arrears," the Ministry of Finance report said.

"At end-June 2023, the four arrangements earmarked for scheduled retirement of external bonds held a cumulative value of $378.6m. Of this, $141.3m is subject to the February 2022 repurchase agreement in which external bonds were sold for repurchase in two years."

That refers to the 'repo' deal which saw the Government transfer almost $236m worth of its US bond holdings to Goldman Sachs in return for $206.5m in cash, providing it with instant US dollar and foreign currency liquidity. The assets transferred to Goldman Sachs, in a deal due to mature in February 2024, represent US Treasury bonds previously held in government-established 'sinking funds'.

Mr Wilson, meanwhile, confirmed that the fourth and latest 'sinking fund' was created with proceeds from collected tax arrears towards the end of the 2022-2023 fiscal year. The move came in a year when the Government largely met its fiscal projections, with revenues, spending and the overall GFS fiscal deficit coming in very close to Budget targets.

"Revenue collection for the year totalled $2.856bn, surpassing the prior year by $246.5 m(9.4 percent), and equating to 99.9 percent of the Budget," the Ministry of Finance report said. "Tax revenue receipts grew $312m (14.4 percent) to $2.474bn, accounting for 97.5 percent of the Budget.

"Strengthened collections were noted in VAT, departure tax, excise duties and stamp taxes on financial and realty transactions. Conversely, non-tax revenue declined by $66.4m (14.9 percent) to $380.4m but exceeded the Budget target by 19.8 percent. The year-over-year decrease is partly explained by the impact of extraordinary payments in the prior year....

"For the review year, the Government experienced an overall deficit of $533.4m, which represented a decrease of $184m (25.6 percent) from the prior fiscal year. This fiscal deficit accounted for 92.7 percent of the annual Budget target."

"We were pretty much on target," Mr Wilson told Tribune Business. "We had a good year. But you are only as good as yesterday. We have to keep pushing. The focus is on now. Nobody is going to give you any prizes for that. There are no prizes for that. We just have to keep pushing forward."

The Ministry of Finance report made no mention of VAT revenues under-shooting their 2022-2023 forecast by $160m, instead focusing on comparisons with last year. Similarly, while government revenues and the deficit beat the original and December 2022 forecasts, they missed the revised targets unveiled when the 2023-2024 Budget was presented in May.

While Tribune Business has already reported that the full-year deficit of $533m slightly exceeded the revised $520.6m, the Government's $2.856bn in revenues also came in around $50m below the $2.909bn detailed in the May Budget book.

Driven by the post-COVID tourism rebound and recovering consumer demand, the Ministry of Finance report said of the Bahamian economy's performance: "Travel demand from major source markets remained strong, with arrivals totaling nine million for the 12 months to June 2023, representing a 91.3 percent gain over the corresponding period a year earlier and surpassing the 2019 comparison by 26.8 percent.

"Alongside these results, the local short-term home rental market had occupancy of 64 percent at end June 2023, a 10.5 percent improvement when compared to the prior year. These favourable outturns in economic activity translated into improvement in employment conditions, with the jobless rate lower at 8.8 percent in May 2023 after surging to 25.9 percent in 2021 and below the 9.5 percent recorded in May 2019."

Turning to the 2022-2024 revenue performance, the Ministry of Finance report said: "Taxes on specific services (gaming taxes), which totalled $63.9m, were $12.6m (24.5 percent) above the prior year and an elevated 121.2 percent of the Budget....

"Reflecting the strong gains in tourism activity and domestic demand, taxes on international trade and transactions improved by $163.7m (32 percent) to $675.4m compared to the prior year and exceeded the Budget projections by 9.6 percent.

"Excise and export duties increased by $75.9m (42.8 percent) to $253.5m or 94.1 percent of the budget target. Departure taxes doubled to $172.2m, an increase of $87.3m (102.8 percent) and eclipsed the Budget target by 77.6 percent."