The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

A CABINET minister yesterday hailed the mid-year Budget’s $4.9m primary surplus as “the first in a very long time” and a signal that The Bahamas is no longer having to borrow to pay interest on its existing debt.

Michael Halkitis, minister of economic affairs, told the RF Bank & Trust Economic Outlook conference: “For the first half of this fiscal year, the primary balance reflected a surplus of $4.9m - a major variance from the primary deficit of $41.2m in the previous year. This primary surplus is the first in a very long time.”

A primary surplus means that the Government’s revenues exceeded its recurrent (fixed cost) spending for the six months to end-December 2022. This measurement strips out interest payments on the Government’s existing debt from the expenditure calculation, which means it did not have to borrow during the 2022-2023 fiscal year’s first half to cover its debt servicing costs.

Summing up the 2022- 2023 mid-year Budget performance, Mr Halkitis said: “As a result of net borrowing activities, central government debt increased by $236.2m to $11.036bn, which equated to 86.9 percent of GDP at the end of December 2022.

“This is equivalent to the rate at the end of June 2022 and, at the end of December, domestic debt accounted for 53.1 percent of central government debt, whereas foreign debt accounted for 46.9 percent of total central government debt.

“And, just back to the issue of the debt-to-GDP at 86.9 percent at the end of December, when we compare that to just over 100 percent in June 2021 we see, again, that moving in the right direction when we look at the overall deficit position.”

And, while the Government has revised the projected full-year deficit for 2022-2023 upwards to $575.4m compared to the original $564m forecast, Mr Halkitis said: “The deficit as a percentage of GDP we forecast to come in still at 4.3 percent, which was forecast at the last Budget that was presented in June 2022, and so these are indeed current encouraging signs.”