The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government ran its third consecutive monthly fiscal surplus in March as the calendar year's traditionally revenue-rich first quarter saw revenues exceed spending by more than $60m.

With total spending flat year-over-year, increasing by just $800,000 compared to March 2022, a 17.4 percent or $49.9m jump in revenue drove the Davis administration to a $40.4m fiscal surplus for the month. Revenues totalled $336.1m compared to total spending of $295.7m, and this outturn helped to decrease the Government's direct debt - while still high at over $11bn - by some $36.8m during March.

The calendar year's first quarter, which is the third period in the fiscal year, traditionally generates a significant chunk of the Government's annual revenues given that it coincides with the winter tourism season's high point and peak economic activity. Significant real property taxes are received as persons move to claim their 10 percent discount for early payment, while end-March is the deadline for receipt of Business Licence fees.

The Ministry of Finance's release signalled that March, and indeed the entire fiscal third quarter, did not disappoint as the Government generated a surplus for each of the three months covered. With revenues exceeding total spending by $3.1m and $18.2m for January and February respectively, when combined with the March performance, the Davis administration was able to achieve a total $61.7m surplus for the 2022-2023 third quarter.

While The Bahamas is far from out of danger when it comes to its fiscal position, the early 2023 performance is a positive sign - albeit modest - and likely gave the Government confidence to project that it will slash 2023-2024's full-year deficit to $131m on the back of a $400m jump in revenues.

Tax revenues for March 2023 increased by 33.7 percent or $77.3m year-over-year, rising from $229.1m during the same month in 2022 to $306.4m this time around. A significant chunk of the increase, some $32.9m, was accounted for by VAT, which rose by 38.5 percent to $118.3m compared to $85.4m in the prior year - a jump likely produced by an improved tourism performance and stronger economic activity.

Taxes produced by international trade and transactions rose to $68.1m in March 2023 compared to $47.8m during the same month in 2022, an increase of more than $20m, while so-called "other taxes on goods and services" jumped to $86m as opposed to $52.1m last time around. That was a near $34m increase, and the Ministry of Finance said the latter was largely driven by the end-March collection of Business Licence fees.

"During the month, revenue receipts firmed by $49.9m (17.4 percent) to $336.1 million when compared to the prior year," the Ministry of Finance said in a statement. "This improved performance was primarily driven by increased VAT collections ($32.9m), and other taxes on goods and services ($33.9m).

"Month- over-month, total revenue grew by $84.9m (33.8 percent) primarily owing to improved tax collection of taxes on property ($13.9m) and other taxes on goods and services ($46.5m), which encompasses the collection of business licenses that were due by the end of March.

"On the expenditure front, total expenditure increased by $0.8m (0.3 percent) to $295.7m relative to the prior year. Outlays primarily increased for public debt interest payments ($15.2m)," the Ministry of Finance added.

"Month-over-month, spending was increased by $62.7m (26.9 percent) mainly due to higher outlays on subsidies ($15.3m), use of goods and services ($11.1m), recurrent transfers ($13m), insurance premiums ($6.2m), and acquisition of non-financial fixed assets ($7.1m). As a result of the above, Government’s fiscal position for March 2023 resulted in a $40.4m surplus and a decrease in the net debt position by $36.8m."

The Government's total fiscal deficit for the first nine months of the 20220-2023 fiscal year stood at $216.2m, a sum equivalent to 37.6 percent of the then-forecast full-year deficit of $575.4m. The Government subsequently revised the projected full-year deficit downwards by around $50m to $520.6m, likely as a result of the relatively strong fiscal third quarter ahead of the year-end influx of bills to pay.

"During the month of March 2023, a surplus of $40.4m was realised, a $49.1m reversal from the prior year’s deficit of $8.8m," the Ministry of Finance added. "Central Government’s net debt decreased during the period by $36.8m, a 109.8 percent decrease from the prior year, as a result of $225.7m in borrowings and $262.5m in repayments.

"Proceeds of borrowings during the period totalled $225.7m via $99.4m in Bahamas Registered Stock, $30m in Central Bank advances, $9.5m in Treasury Bill placements, $75m in domestic loans and $11.7m in foreign currency loans. Repayments totalled $262.5m owing to repayments of $32.5m for Central Bank advances, $11.9m for maturing Treasury stock, $87.4m for Bahamas Registered Stock and $90.6m for foreign currency loans."

The Government's recurrent or fixed cost spending for March totalled $266.1m, a 2 percent or $5.4m decrease compared to the same month in 2022, while capital spending was up by $6.2m or 26.2 percent at $29.6m.