The Tribune

By NEIL HARTNELL

Tribune Business Editor

THE Government suffered a negative swing equivalent to 4.1 per cent of gross domestic product - worth more than $320 million - in its finances during the three month period between December 2011 and February 2012, a development in part prompted by pre-election spending.

The United Nations' (UN) Economic Commission for Latin America and the Caribbean (ECLAC), in a report on the Bahamas' 2012 first quarter performance, said: "Plans to contain the deficit did not materialise in the first quarter of 2012.

"For the three months from December 2011 to February 2012, the Government registered a deficit of 2.7 per cent of GDP, compared with a surplus of 1.4 per cent of GDP in the similar period of the fiscal year 2010-2011.

"This result stemmed from net lending to public corporations, higher spending on infrastructure and the job creation programme in the face of only modest growth in revenues. Public sector [direct] debt expanded by 1.3 per cent to $3.86 billion at the end of March 2012, compared with December 2011."

The ECLAC report added that "the fiscal deficit widened, partly due to election spending". The Christie administration has accused the former government of overspending in the run-up to May 7, 2012, citing as one example its jobs programme, which was said to have increased in cost from $25 million to $48 million. The FNM, though, countered that this was because the Government was counting monies committed for the next fiscal year.

The better news in the ECLAC report was that the Bahamian economy is projected to grow by 2.8 per cent in 2012, the fourth highest GDP expansion rate in the Caribbean. This, the report predicted, was set to come from tourism recovery, foreign direct investment associated with the Baha Mar project, and infrastructure spending.