The Tribune

• Auditor General: Borrowing beat target by 62%

• But 2019-2020 report never tabled in House

• Constitution mandates that no ‘undue delay’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The two greatest crises in modern Bahamian history resulted in the Government’s 2019-2020 revenues falling $544.1m short of their target, its leading fiscal watchdog has affirmed.

The Auditor General’s Office, in its report on the Government’s accounts for the Dorian and COVID-hit year, also disclosed that the then-Minnis administration’s $1.23bn borrowing exceeded Budget estimates by $474.6m or 62 percent as it urgently sought to plug this income hole and prop up an economy that had literally imploded overnight due to pandemic-related lockdowns and travel closures.

The report, which has been placed on the Ministry of Finance’s new investor relations website, has never been tabled or laid in the House of Assembly as is the norm. But Terrance Bastian, the auditor general, as is customary, wrote in a note dated November 23, 2022, that he was submitting the report to House speaker, Patricia Deveaux, as required by Article 136 (4) of the Bahamian constitution.

It is unclear why the Auditor General’s 2019-2020 report has yet to be tabled in the House more than a year after it was seemingly submitted by Mr Bastian, which raises questions over whether the Speaker has fulfilled her constitutional mandate to ensure such documents are “laid.... without undue delay”.

The same article 136 (4) in the Bahamian constitution stipulates: “The Auditor General shall submit his reports under paragraph (3) of this article without undue delay to the Speaker (or, if the office of Speaker is vacant or the Speaker is for any reason unable to perform the functions of his/her office, to the Deputy Speaker) who shall cause them to be laid before the House of Assembly without undue delay.”

Ms Deveaux, when contacted by Tribune Business, said she was unaware of the Auditor General’s 2019-2020 fiscal year report and would have to “check into” the matter. One source, speaking on condition of anonymity, said there were only two possible explanations for why the report has not been laid in the House - either the Auditor General did not send it, or the Speaker failed to table it.

Whether the Auditor General’s Office itself submitted the report “without undue delay” could be open to question, but its data verifies the devastating impact that first Hurricane Dorian, then COVID-19, had on the Government’s finances as both events occurred virtually back-to-back within seven months of each other.

Noting that the Government had targeted full-year revenues of $2.62bn, the report confirmed: “The $2.08bn actual recurrent revenue fell short by $544.1m or 21 percent..... Tax revenue collections totalled $1.85bn, $489.96m or 21 percent less than the budgeted $2.34bn.

“The $2.08bn recurrent revenue generated in 2019-2020, in comparison to the prior year’s $2.42bn revenue performance, is a decrease of $341.7m (14 percent).” Besides Dorian, the final three-and-a-half months of the 2019-2020 fiscal year were hit by the worst of COVID’s lockdowns and other restrictions.

The Auditor General’s Office said VAT and other taxes suffered a $278.35m, or 21 percent, shortfall compared to 2019-2020 Budget targets of $1.32bn, while import and export duties undershot their $329.37m goal by $51.89m or 16 percent. Excise tax was the biggest under-performer, down 27 percent or $77.68m against the $283.27 forecast, while real property and tourism taxes were off by 23 percent and 21 percent.

As for non-tax revenue, the Auditor General’s Office found that fell some $54.13m or 19 percent short of 2019-2020 Budget targets. This category finished at $231.59m, as compared to projections of $285.73m, with fees and service charges and interest/dividend payments missing their goals by 29 percent or 56 percent, respectively.

Not surprisingly, VAT was the highest revenue generator for the Government during 2019-2020 due to collections gained during the fiscal year’s first three quarters. “The $875.54m VAT revenue collections accounted for 47 percent of the overall $1.85bn tax revenue,” the report said. “This was followed by $277.47m (15 percent) for import and export duties, and $205.58m (11 percent) for Excise Tax.

“Bahamas Customs’ $338.75m revenue collection for VAT on imported goods decreased by $83.82m (20 percent) over the prior year’s $422.58m. The Department of Inland Revenue $536.1m revenue collection for VAT increased over the prior year’s $473.15m by $62.95 (13 percent). Overall, VAT revenue decreased by $21.02m (2 percent) over the prior year’s $896.56m.”

The Auditor General’s Office further confirmed the fiscal strain imposed on the Government’s finances as a result of having to incur almost $260m in extra recurrent (fixed-cost) spending, and $299m in additional capital expenditure, to both meet the health challenges sparked by COVID-19 and support a buckling economy along with thousands of households and businesses.

With extra borrowing required to fill the financial holes, the report added: “The $1.23bn funds acquired from financing activity (proceeds from borrowings) went over the $764.88m budget by $474.76m or 62 percent..... With respect to the prior year’s $1.09bn, borrowings increased in 2019-2020 by $142.9m or 13 percent.”

As for the Government’s spending, the Auditor General’s Office confirmed: “The actual recurrent expenditure of $2.53bn went below the $2.78bn revised expenditure budget by $256.59m (9 percent). Recurrent expenditure increased by $64.59m (3 percent) over prior year’s $2.46bn.....

“Impacted by both catastrophic events, Hurricane Dorian and COVID-19, capital expenditure increased by $163.83m (73 percent) to $387.19m in 2019-2020 over $223.36m in 2018-2019. Capital expenditure went under the $534m final approved budget by $146.89m (28 percent).

“The Ministry of Finance facilitating capital assets acquisition, development, outlays and projects accounted for $179.5m (46.4 percent) of the $387.19m capital expenditure. The Ministry of Public Works accounted for $87.3 (22.5 percent) of the $387.19m.”