By NEIL HARTNELL
Tribune Business Editor
The 75 per cent increase in the fiscal deficit for the four months to end-October 2016 shows “a staggering and alarming” absence of fiscal responsibility, a leading governance reform campaigner believes.
Robert Myers, a principal with the Organisation for Responsible Governance (ORG), told Tribune Business that the $67 million increase in the deficit for the first four months of the 2016-2017 Budget period provided further evidence as to why the Bahamas needed a Fiscal Responsibility Act.
Emphasising that the Bahamas’ fiscal and debt woes are “not going to fix themselves”, Mr Myers said restrictions had to be placed upon the Government to ensure it spent taxpayers’ money in a responsible manner.
“That is exactly the problem. The lack of fiscal responsibility is staggering and alarming,” Mr Myers replied, when informed by Tribune Business that the Government’s $157.5 million deficit for the four months to end-October 2016 was more than 50 per cent higher than its full-year projection.
While some of that is likely due to Hurricane Matthew, and its impact on the economy and government revenues, it cannot all be blamed on the storm, especially given that the $100-$150 million in emergency borrowing had yet to show up in the data.
“These are the very signs that should compel the Government and the people to put in place a Fiscal Responsibility Act,” Mr Myers told Tribune Business of the latest fiscal data, “and ways to force the Government to recognise that it has not been behaving in the way it should.
“If it’s not behaving in the way it should on its own, it needs to have restrictions put on it to act in a fiscally responsible way. Talk is cheap. Action counts here, not talk.”
The Central Bank’s December 2016 economic developments report showed the fiscal deficit for the first four months of the 2016-2017 Budget year had grown by 75.3 per cent or $67.7 million compared to the prior year.
The $157.5 million deficit at end-October 2016 was over 50 per cent higher than the Christie administration’s full-year forecast of $100 million, meaning the Government has blown past its Budget projection with just one-third of the current fiscal year gone.
ORG, the Chamber’s Coalition for Responsible Taxation have repeatedly called for the Government to introduce a Fiscal Responsibility Act in the wake of VAT’s introduction.
This would enhance transparency and accountability surrounding the Government’s management of the public finances, forcing it to return to Parliament and provide explanations if it needed to exceed previously agreed spending and borrowing limits, and even potentially requiring it to maintain certain deficit and debt-to-GDP targets and ratios.
The Christie administration, though, has failed to deliver on February 2015 promises to initiate consultation on a Fiscal Responsibility Act, and Mr Myers called on “others to stand up” over the issue.
“It’s not going to fix itself on its own,” he told Tribune Business of the Bahamas’ financial problems. “The Government is clearly not going to do it.
“The status quo is broken and needs to be fixed, and the only way that can happen is to be modern, accountable and transparent.”
Mr Myers said “poor governance and mismanagement” by successive administrations, both PLP and FNM, had placed the Bahamas into its current fiscal predicament.
While the former Ingraham administration added around $1.5 billion to the national debt during its 2007-2012 tenure, its successor almost outpaced this rate of ‘red ink’ accumulation in three.
In the period closing with the 2014-2015 fiscal year, the Christie administration generated $1.408 billion in cumulative GFS deficits. With around $300 million estimated to have been incurred in 2015-2016, the current government will have added between $1.8-$2 billion by the time it leaves office.
Mr Myers said the real issue for the Bahamas was not ‘where the VAT money gone’, as this was merely a catchphrase for fiscal accountability and transparency.
“The problem is the balancing of the Budget and matching spending to tax revenues,” Mr Myers said. “The Government has failed to balance the Budget and reduce the national debt.
“Those are the core and fundamental problems, and the ones that will sink the ship. We know what’s happened. The debt is continuing to rise, and the deficit still exists.
“The whole point of VAT was deficit elimination and debt reduction. That hasn’t happened. They’ve continued to spend, and recurrent expenditure is up.”
Mr Myers called on the Government, private sector and individual Bahamian citizens to collaborate on ways to attack the fiscal problems and get the nation “moving in the right direction”.
“It’s no good sticking your head in the sand and thinking it’s going away,” he added. “It’s only getting worse by the day.”