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THURSDAY, FEBRUARY 27, 2025
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‘At a loss’: But Davis sticks to $70m deficit
‘From burners to earners’: PM targets Bahamas’ ‘junk’ escape
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By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Opposition’s finance chief yesterday asserted he is “at a loss” over why the Prime Minister is standing by the $70m full-year deficit target despite overshooting this more than five-fold after just six months. Philip Davis KC, unveiling the mid-year KWASI THOMPSON Budget in the House of Assembly, sought to soothe concerns over the near-$400m deficit at end-December 2024 by reiterating the Government’s oft-stated position that “there is no need for alarm with respect to our ability to achieve our fiscal targets”. To justify this stance, he argued that revenue and spending trends had left his administration “comfortable that we will stay in line with the Budget” and produce a yearend deficit equal to 0.5 percent of economic output or gross domestic product (GDP). Mr Davis also voiced confidence the Government will achieve its 23.3 percent revenue-to-GDP target following “record” half-year revenues of $1.44bn for the first six months. However, while the Prime Minister touted both the revenue numbers and success of the Government’s tax enforcement/compliance initiatives, little was announced by way of new measures or actions that would help close the gap between the full-year and half-year deficits. Tribune Business previously reported that a fiscal surplus four times’ greater than the $72m generated in the 2023-2024 second half is needed to achieve this. Kwasi Thompson, the Opposition’s finance spokesman, told this newspaper he heard
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THE Government must transform some in the “bloated” civil service from “burners to earners” and generate annual 5 percent GDP growth to return The Bahamas to ‘investment grade’ status within three years. Robert Myers, a former Bahamas Chamber of Commerce and Employers Confederation (BCCEC) chairman, yesterday told Tribune Business that the Prime Minister’s ambitions to escape ‘junk’ status with both Moody’s and Standard & Poor’s (S&P) in this timeframe is “achievable” if this nation can get movement “in both directions”. Reducing the public service’s size, and switching those impacted to private sector employment, would result in these persons generating tax revenues as opposed to these monies being spent on them - what Mr Myers describes as “from burners to earners”. And, to pull-off such a switch without causing economic hardship and dislocation, he reiterated that The Bahamas
ROBERT MYERS
GOWON BOWE
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this newspaper that consistent annual 5 percent growth was essential to not only absorb those impacted but would increase tax-generating economic activity. To achieve
PHILIP DAVIS KC this much-higher growth rate, Mr Myers renewed his and others’ calls for a renewed focus on improving the ease of doing business. Mr Davis yesterday disclosed that the Government has also hired a third credit rating agency, Fitch, to assess The Bahamas’ creditworthiness, fiscal position and economic prospect as part of the strategy to restore this nation to ‘investment grade’ status. And, as part of proving The Bahamas can still access the international bond and
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Gov’t facing $552m guarantees for SOEs By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Government potentially faces having to guarantee almost $552m on behalf of the very state-owned enterprises (SOEs) that the Prime Minister yesterday identified as a major “risk” to its financial well-being. Information released with the mid-year Budget discloses that the “proposed
guarantees” required by nine separate SOEs range in size from $8m to $167m to reinforce Philip Davis KC’s warning that their reliance on the Government to underwrite financial support presents “considerable fiscal challenges”. Besides the $8m that may be required by the Bridge Authority to finance bridge maintenance, Bahamasair is said to need $60.992m for the repair of aircraft engines
and to finance a new fleet. Then there is some $37.081m required by the Bahamas Development Bank (BDB) for “operational funding”; $20m sought by the Educational Loan Authority for similar reasons; and $49.192m for Water & Sewerage Corporation activities. Other agencies named are the Public Hospitals Authority (PHA), which is seeking $35.316m to fund construction of a new Critical Care
Block, plus the Clifton Heritage Authority which is eyeing $24m for “operational funding and development of the Clifton Heritage Park”. The two biggest potential guarantees, though, are being sought by the Bahamas Mortgage Corporation and Bahamas Resolve. The former is seeking to obtain $150m for “operational funding” while Bahamas Resolve, the bail-out vehicle, likely
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PM: ‘Hell no’ to IMF’s 15% VAT suggestion By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Prime Minister yesterday revealed his response to International Monetary Fund (IMF) recommendations that The Bahamas increase its VAT rate to 15 percent was: “Hell no.” Philip Davis KC, unveiling the mid-year Budget in the House of Assembly, said the “record” $1.44bn revenues generated during the 2024-2025 fiscal year’s first half had occurred “despite the recommendation from the IMF to raise the VAT rate to 15 percent
in line with what they call my regional colleagues. Hell no. “Let me put it this way,” he added. “It was their recommendation. They recommended it. It was for me to decide whether to accept it. We decided against raising it to 15 percent as was being planned. Thank God for September 16, 2021. We brought it down.” Mr Davis’s reference to the general election date implied that the Minnis administration was preparing to raise taxes had it been voted back into office, whereas his administration rejected the external
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Gov’t uses 73% of Budget Reserve during first-half By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Government spent 73 percent, or more than two-thirds, of the $60.275m allocated for its Budget Reserve Appropriation fund during the 2024-2025 fiscal year’s first-half, it was revealed yesterday. Data released with the mid-year Budget showed some $29.387m was used to cover recurrent or fixedcost spending during the six months to end-December 2024, while another
$14.893, was employed for capital expenditure purposes for a combined total of $44.281m. Of the recurrent sums, the greatest was $11.057m paid to the National Insurance Board (NIB) to cover costs associated with the National Prescription Drug plan. However, the use of other monies was somewhat vague, including more than $4m that was employed by the Prime Minister’s Office to cover “payment for supply of water” and
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