The Tribune

BY FAY SIMMONS

TRIBUNE BUSINESS REPORTER

jsimmons@tribunemedia.net

GOVERNMENT loans to Bahamas Power & Light accounted for $241.5m of the $631.4m owed by public entities at end-March, as the Fiscal Responsibility Council warned that some supposedly short-term liquidity support has effectively become longer-term debt.

The FRC, in the recent Fiscal Strategy Report warned that while the Government's Public Expenditure and Fiscal Unit does not identify loans to public entities as a source of fiscal risk, defaults — including in the short term — could affect the Government's fiscal position.

The council highlighted the Government's need to frontload Central Government borrowing to meet operational obligations during the first six months of any given financial year, noting this made the continued lending to public entities a potential budgetary concern.

The FRC noted that while the loans have been described as short-term liquidity support, some balances have been carried over from at least end-June 2024 through end-March 2026.

One such balance was $241.5m outstanding for Bahamas Power & Light Company Limited and Bahamas Electricity Corporation at end-March 2026.

The report also separately identifies other lending to Bahamas Power & Light, which increased from $140m at end-June 2024 to $204m at end-March 2026.

The distinction is important because the report's $241.5m figure relates to the balance identified for BPL and Bahamas Electricity Corporation, while the $204m figure is described separately as other lending to BPL.

The FRC said short-term liquidity lending is "typically designed to address immediate working capital needs and generally feature repayment terms of less than one year."

The council questioned whether balances that remain outstanding for multiple years should continue to be treated as short-term liquidity support.

"The FRC is of the view that this lending represents a source of risk to the Government's budget," the council said.

It added that "obligations extending beyond the standard one-year period for short-term lending, constitutes longer term debt."

The warning means the FRC is effectively drawing attention to the duration of Government's support to public entities, rather than simply the size of the lending.

The council said the Government's exposure becomes more significant where public entities are unable to repay loans, potentially leaving the Treasury responsible for covering the resulting shortfall.

The FRC's concerns form part of its assessment of fiscal risks in the Fiscal Strategy Report 2026, which considers the potential impact of public entity lending on the Government's overall fiscal position.

The council also raised wider concerns about the financial position and reporting of State-Owned Enterprises.

It noted that its SOE risk assessment was limited to nine of the Government's 32 public agencies and Government Business Enterprises because of data availability constraints.

The FRC described the risk assessment as "critically important" to ensuring that SOE financial performance is incorporated into the Government's overall fiscal profile.

The council recommended that Government strengthen the framework for monitoring and holding SOEs accountable for their financial reporting obligations.

The lending issue comes as the Government continues to provide financial support to the energy sector.

In its assessment of the FY2026/27 budget, the FRC also warned that the Government's acquisition of the Grand Bahama Power Company would result in increased fiscal exposure requiring "ongoing monitoring and assessment."

The FRC acknowledged that Government support for public entities can be important to maintaining essential services, but warned that lending which remains outstanding beyond the normal one-year period should be recognised as a longer-term fiscal obligation.

The council's assessment therefore raises questions about how the Government's public entity lending is classified and reflected in its broader fiscal-risk and debt management framework.