9th June 2023
The Philip Davis-led Administration has tabled a US$3.5bn national budget in the nation’s parliament for the upcoming fiscal year.
Prime Minister Davis, who is also Minister of Finance, announced a projected deficit of US$131.6mn for the period, but emphasised that there will be no new taxes or tax increases. Recurrent revenue is estimated to be US$3.3bn, recurrent expenditure at US$3.1bn, and capital expenditure at US$364.6mn. The government aims to generate more revenue through improved tax compliance and enforcement without raising taxes.
Davis expressed confidence in achieving a balanced budget by 2024/2025, noting that revenue receipts have been strong due to legislative reform, effective policies, improved economic conditions, and better collection efforts, while public spending is on track.
The prime minister revealed several initiatives, including financial support for the Shantytown Action Task Force, ongoing development of a new health facility in Grand Bahama, the establishment of a new hospital in New Providence, and further enhancements to the infrastructure of clinics on the Family Islands.
Other plans include funding for a School for the Creative and Performing Arts, support for the National Youth Guard Programme, the consolidation of National Health Insurance and the Prescription Drug Plan into a unified health policy, and the acceleration of a rent-to-own programme and other home ownership concessions.
He also announced an increase in the monthly constituency allowance and the constituency capital grant from US$2,500 to US$3,500, while the capital grant will be raised from US$100,000 to US$150,000 per year.
The speech outlined several measures to enhance the growth of the local capital market including the implementation of a competitive bidding system for primary market issuances of Bahamas registered stocks, and elimination of the tax imposed on businesses’ interest income derived from holding government securities.
Davis emphasised that the budget does not compromise the fiscal outlook. “Barring the advent of unforeseen developments, we are still on track to achieve a balanced budget by 2024/2025,” said the Prime Minister.
He highlighted that due to the country’s net borrowing activities, central government net debt increased over the first three quarters of the current fiscal year by US$290.8mn to reach US$11.1bn. However, the significant post-COVID-19 economic rebound saw the debt to GDP ratio decrease to 83.5% in March 2023 from 87.3% at the end of June 2022.
Davis said that the government is awaiting approval from the Inter-American Development Bank (IDB) on two policy-based guarantee instruments that will enable the country to borrow money at more favourable rates and is considering debt-for-nature swaps to have a portion of foreign debt forgiven in exchange for conservation commitments.
“A key component of the government’s fiscal strategy is to use access to CDB [Caribbean Development Bank] and IDB financing to lower our overall funding cost, by leveraging the institutions’ AAA credit rating. Reduced borrowing costs and improved debt tenor are tools which should improve the overall debt profile of the nation,” he said, adding that the strategy includes a shift towards domestic borrowing and away from costly external commercial debt.
Meanwhile, Leader of the main opposition FREE National Movement (FNM), Michael Pintard said that the budget undelivered on promises made.
“This is a government that promised that it would improve the ease of doing business. What has happened is, in fact, quite the opposite,” said Pintard attacking the budget. He highlighted the government’s failure to address issues such as the reform of state-owned enterprises and the projected depletion of the National Insurance Board fund. Pintard also criticised the lack of a comprehensive plan for the future of energy, expressing concerns about financial arrangements with fossil fuel companies instead of transitioning towards solar energy.
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Photo via Minister Davis Linkedin
