The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The International Monetary Fund (IMF) last praised the Government’s Value-Added Tax (VAT) reform as “on course” to hit revenue targets, while urging it to implement “far-reaching reforms” at state-owned corporations.

Wendell Samuel, head of the IMF team that visited the Bahamas between March 9-20 for the annual Article IV consultation, lauded the Christie administration for its fiscal reform progress.

“Commendably, the authorities continue to be on track in implementing their strong fiscal consolidation programme to rebuild fiscal buffers eroded in the aftermath of the global crisis, and reverse recent significant increases in public debt,” Mr Samuel said in a statement.

“The fiscal deficit in 2013-2014 is estimated to have narrowed to 3.3 per cent of GDP from 5.4 per cent.”

And, praising the Government for introducing VAT, Mr Samuel added: “This reaffirms their commitment to medium-term fiscal consolidation, and represents a significant step towards boosting credibility and bolstering market confidence.

“Early indications of VAT performance are encouraging, and the authorities seem on course to achieving the initial revenue targets.”

The Government has projected it will earn $150 million from VAT in the half-year to end-June 2015, and between $300-$350 million in the first full year,

Mr Samuel, though, called on the Government to “advance other revenue measures, including modernisation of Customs and property tax administration, and establishment of a Central Revenue Agency”.

He added: “Provided that these measures are implemented, together with stronger restraint on current expenditure in the context of a medium–term budgetary framework, the trajectory of central government debt would be reversed and fall below 60 per cent of GDP by fiscal year 2019-2020.

“Advancing far reaching reforms at the state-owned enterprises is needed to stem their drag on public finances. The mission urges the authorities to intensify the reform momentum at key public enterprises including Bahamasair, Bahamas Electricity Corporation and the Water and Sewerage Corporation, which will also help to relieve infrastructure bottlenecks in the provision of these essential services, and would thereby improve the Bahamas’ external competitiveness.”