The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

BAHAMIANS “just have to trust” the Government’s assertion that the public finances are still on track to meet their full-year targets despite the early outturn, a governance reformer says.

Hubert Edwards, head of the Organisation for Responsible Governance’s (ORG) economic development committee, told Tribune Business that the $185m fiscal deficit through the first five months of the Government’s 2023-2024 financial year is “no surprise” as the first quarter report had already signalled the trend.

“We are at a place where we must trust the officials dealing with these important national matters,” he said. “If it is of their view that things will start to turn around in the next quarter, or certainly by now, and we are going to see significant inflows which will cause a normalisation of the rate at which the deficit is showing up on paper, then I think we just have to trust them.”

Simon Wilson, the Ministry of Finance’s financial secretary, asserted that the fiscal deficit for the first five months is aligned with government forecasts even though it exceeded the full-year target by $54.3m. The deficit stands at $185.4m for the five months to end-November 2023, as compared to the full-year target of just $131.1m. However, it is just $2.3m higher than the $183.1m deficit generated for the five months to end-November 2022, and Mr Wilson said the administration had projected that it would either match last year’s performance or be slightly higher.

Mr Edwards said: “We have to view that on the backdrop of what was mentioned by the International Monetary Fund (IMF). The IMF already indicated that the deficit is expected to be at about 2.6 percent or more [of GFP]. That would translate to about $300m-plus. If that is the case then we certainly expect, at the end of the day, to see some reasonable measure of a deficit being realised at the end of the fiscal year.”

The Government defended the deficit by saying the first half of the fiscal year is always weak, and the bulk of its revenue does not accrue until the Budget year’s second half, when Business Licence fees and real property taxes are paid and there are additional tourists in-country.

Mr Edwards added: “If the Ministry of Finance’s official pronouncement holds true, and there are additional revenue sources which have not yet chipped in, which is going to roll through at a more accelerated level or at a higher level than it had done up to now, then the deficit will normalise.

“My position would be that, at the end of the day, we ended up seeing some sort of a deficit, which is much less than the pronouncement by the IMF, but it is certainly my projection that we will not meet the 0.9 percent that was projected. I believe we will not meet that or be below that.”