The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The Government will only borrow money to finance Hurricane Joaquin-related reconstruction as “a final option”, a Cabinet Minister confirming that Value-Added Tax (VAT) revenues would be used to defray some spending.

Michael Halkitis, minister of state for finance, sought to addressing public and Opposition concerns over what is being done with VAT revenues, and why the Government looking to borrow money for rebuilding efforts.

“During the Budget debate every single line was examined and analysed by the Opposition,” said Mr Halkitis.

“The Budget calls for VAT revenue during the 2015-2016 fiscal year of $544 million; total tax revenue of $1.7 billion; non-tax revenue of $338 million for a total revenue of just over $2.046 billion, with a total expenditure of $2.098 billion, and then we are borrowing about $286 million for this fiscal year.”

Mr Halkitis added: “Chapter 128 of the Bahamas Constitution provides for the establishment of a Consolidated Fund into which all revenues of the Government of the Bahamas are paid.

“Quite simply, the VAT revenue that we expect to collect this year will go towards defraying the expense of the Government of the Bahamas. That is what has been budgeted,” he added.

“We have had a storm, but it’s up to us now to do the assessment, find out what the costs are in the first instance, establish whether we can reprioritise some of the things in this Budget, and then as a final recourse seek to borrow any additional money. VAT revenue will be used to defray Government expenditure and in some of the rebuilding. To the extent that we cannot work within the Budget then we will then we look towards further borrowing.”

Prime Minister Perry Christie said recently that the initial assessment has pegged the damage at well over $60 million. This figure, he said, is expected to increase as the Ministry of Finance continues to receive additional assessments.

Mr Christie said the funds needed to cover the cost of the recovery and repair phase are likely to be obtained through borrowing from either the Caribbean Development Bank, financing from the People’s Republic of China, or from other traditional sources. 

Mr Halkitis said the Cabinet was expected to get an update yesterday on further assessments. “We will see whether that number has grown or decreased and we will move from there,” he said.