By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The FNM’s deputy leader yesterday pledged that the new government will not leave Bahamians “high and dry” over commitments made to them by its predecessor, as he warned it may need to be “cut some slack” over the upcoming Budget.
K P Turnquest told Tribune Business it was “going to be very difficult” to ensure the 2017-2018 Budget reflects the new government’s agenda and priorities, given that it is due to be presented in the House of Assembly in less than two weeks.
He emphasised that the incoming government now faced the challenge of meeting the Christie administration’s spending commitments without adding to a fiscal deficit that has remained stubbornly above $300 million throughout the past five years.
Acknowledging that the FNM faced a difficult balancing act, Mr Turnquest, the party’s finance spokesman in opposition, promised it would be fully “transparent” over the fiscal and economic conditions that in inherits.
“I think that with only two weeks to go it’s going to be very difficult for us to do much of anything,” Mr Turnquest told Tribune Business of the 2017-2018 Budget.
“In the next week we’ll have a review of what is contained in there; what programmes are funded and defunded, what the revenue sources and funding look like, and from there potentially make adjustments for the programmes we want to consider.”
The Budget is due to be presented on May 24, ensuring it will be one of the newly-elected government’s first key acts.
Much of the ‘heavy lifting’ and Budget planning will have already been carried out by the Ministry of Finance and other key officials, with spending allocations set for most ministries, departments and agencies based upon revenue projections.
With general elections now frequently being held in May, and voters preferring to vote incumbent administrations out in the last four elections, incoming governments have very little time to put their stamp on the following year’s fiscal agenda.
“This is a critical time and we want to meet our commitments to the Bahamian people as quickly as possible, but at the same time we’ve not got a fully transparent picture of where everything stands,” Mr Turnquest said.
Moving to manage the electorate’s expectations, the FNM deputy leader said it would likely to “be able to roll out” some of its programmes with the 2017-2018 Budget, but others may have to wait until later this fiscal period or even be pushed into 2018-2919.
“On this one I think the Bahamian people are going to have, for want of a better word, cut us a little slack because it’s so late,” Mr Turnquest added.
“But we do promise to be transparent with the Bahamian people, and communicate the state of the economy and government’s finances, so that they fully understand when we do move forward why we are doing certain things, and why we may have to delay certain programmes.”
The Christie administration, in its last Budget, projected that the Government would narrow the GFS fiscal deficit (this measurement strips out debt principal repayments) to just $28 million, or 0.3 per cent of GDP, in its 2017-2018 Budget year.
This target, though, is extremely optimistic given that the extra strain imposed on the Government’s finances, as a result of the $600-$700 million damages inflicted by Hurricane Matthew, is likely to still be working its way through.
Simon Wilson, the financial secretary, earlier this year said the Government believes it can “achieve a balanced Budget” within the next four years, meaning the GFS deficit would be eliminated by 2020-2021.
This is less optimistic than the Christie administration’s last Budget forecast, which projected that the Government would run a $68 million GFS surplus in 2018-2019.
It is now up to the incoming Minnis-led administration to continue the fiscal consolidation programme, which has made progress but much more slowly than anticipate, and determine whether this needs to be accelerated to tackle the $7 billion-plus national debt.
Mr Turnquest, though, expressed particular concern over whether funding has been allocated in the 2017-2018 Budget for the numerous pre-election spending commitments made by its predecessor administration.
“We’re very concerned about the commitments made in the last couple of months and weeks, up until the last couple of days,” he said, “and whether funding sources have been identified, or if they are promises left out there and new government will have to figure it out.
“We are running a recurrent deficit, have a significant debt problem, and don’t want to make it worse. We want to cut back on spending, and do as the previous government promised but never did, which is to use the VAT money to reduce the debt.”
Mr Turnquest warned that it would “be very difficult” to achieve this given the Christie administration’s numerous commitments, which included promotions and salary increases for Royal Bahamas Police Force (RBPF) and Royal Bahamas Defence Force (RBDF) officers; the payment of police officers; the ‘regularisation’ of hundreds of temporary civil servants as full-time; and the fates of numerous persons hired on three-month contracts in the public sector prior to the election.
“The ones of most concern to me are the human resources ones, as they relate to individual Bahamians,” Mr Turnquest told Tribune Business. “It would be unfair for them to be left high and dry. We’re going to see how we can make this work and be fair to all concerned.”
The current forecasts are for the Government to earn $2.245 billion in recurrent revenues in the 2017-2018 fiscal year, with recurrent spending pegged at $2.302 billion, thereby creating a $2.302 billion recurrent deficit.
Another source of potential Budget pressure, though, is the commitments made by the Christie administration to Baha Mar’s new owners in their April 25 Heads of Agreement.
These obligate the Government to resolve the New Providence landfill’s woes, energy supply problems and provide a wastewater treatment plant by year-end 2017.
“These were going to have to be addressed anyway, the landfill and power generation issues,” Mr Turnquest said. “But we don’t want to be locked into any agreement that is unfair to the Bahamian people and puts a burden on us.”
Comments
Reality_Check 6 years, 11 months ago
The only thing Mr. Turnquest needs to know is that the Bahamian people will not look too kindly on significant budget variances down the road of the kind seen throughout the last five years of the corrupt Christie-led PLP government. Sharpen your pencil well Mr. Turnquest. The people will not accept excuses later along the lines of the Christie government did this or that which the Minnis administration did not know about at the time of drawing up the budget. The Minnis government must be realistic and give us the true picture in the first budget they present no matter how painful it may be for us to see. We demand the transparency that has been promised to us!
gbgal 6 years, 11 months ago
Our fiscal commitments are in good hands! I support the efforts of the new government to lead us out of the mucky financial swamp to firmer ground. It will not be easy, but at least we, the people, will be informed every step of the way. Finally, a government doing business in the light of day rather than the dark of night. Blessings!
DonAnthony 6 years, 11 months ago
In two weeks, after the FNM govt has seen the books and have a good understanding of the lay of our fiscal land, there will be the need for a frank and sobering conversation with the Bahamian people. We simply can not afford the size of our govt and the services successive govts. have promised to provide.
Our budget must be balanced in at most 3 years. This will perhaps necessitate an increase in taxes but definitely a significant reduction in expenditures. The civil service needs to be downsized, and all govt corps that are currently loss making need to be privatized as soon as possible. It will be painful but it is needed, we can not continue to live beyond our means simply borrowing year after year leading to a massive deficit. We are at a watershed moment, but if after 5 years there is not a meaningful reduction in our debt this FNM govt will unquestionably be voted out.
We need to make the necessary sacrifices and changes ourselves before they are forced upon us. Failure to be fiscally responsible now, in short order will lead to devaluation, and the imposition of onerous demands on us by the IMF such as a massive reduction in the size of the civil service. Barbados recently underwent just this painful exercise, we should learn from their mistakes.
MassExodus 6 years, 11 months ago
Agreed. We will see after the thoroughly examine the books.
DEDDIE 6 years, 11 months ago
I am personally of the opinion that 25% of the budget is waste and kickbacks. If the FNM government keep the leeches at bay, the Bahamian people should realize significant savings.
Socrates 6 years, 11 months ago
changing the budget year was a dumb thing the Ingraham govt did. unless a snap election is called, we will always have elections in April/May meaning an incoming government has no opportunity to create their own budget. so this coming budget, 2016/2017, will be a PLP budget. with a 5 yr term, can a govt afford to lose 1 year to make changes?
John 6 years, 11 months ago
Bite the bullet early as Obama did and in your fourth and fifth year you will have money for dressings and decorations. Obama left the US economy in one of the best conditions it's been in in years, considering the conditions he had to work under. Now Trump comes in and not only tries to take credit for the growing economy, but he slashes corporate tax by more than 50%. If this new fotos successful in slashing corruption by 50% and getting foreign investors to contribute 50% more to the tax burden they can have a surplus budget in three years.
Well_mudda_take_sic 6 years, 11 months ago
Re-post: With a national debt of $72 billion, bankrupt Puerto Rico's debt-to-GDP ratio is 70%. By comparison our national debt is $7 billion and our debt-to-GDP ratio is slightly more, now about 74%. Puerto Rico also has some $37 billion worth of guaranteed pension benefits that it owes to its government employees, liabilities which would boost its total debt load up to 106% of the island territory’s GDP. In our case we have at least $3 billion of unfunded guaranteed pension obligations and other benefits that we owe our civil servants and former corrupt politicians which would increase our total debt load up to at least 106% of our GDP. Puerto Rico has a total population of 3.5 million compared to our 380,000. But there is a critical difference between Puerto Rico and ourselves - their currency is the U.S. dollar and they have a very big brother, the U.S., that can print money that's accepted globally! Now we have some idea why Minnis did not want to be both PM and Minister of Finance like his predecessors. Apart from Minnis being most uncomfortable with numbers of the debits and credits variety, Minnis no doubt senses that the Ministry of Finance is one very severely challenged ministerial portfolio - it was a hot potato for Christie and will soon be a flash point for Minnis's administration. Not a pretty picture indeed when so many have such high hopes for our new government. Meanwhile it seems the crooked politicians of the past will be allowed by Minnis to enjoy the fruits of their endeavours, some of them in countries other than the Bahamas!
happyfly 6 years, 11 months ago
All the FNM needs to do is figure out a way to get their hands on all the money the PLP thieved in the last five years, and stop bailing out BOB and other perpetually failing gov. corporations and we would not need any more taxes.....thank you very much
OldFort2012 6 years, 11 months ago
A very wise man once said: "If you will need to swallow a bunch of frogs, take the largest and swallow it immediately."
killemwitdakno 6 years, 11 months ago
With Turquest being there from last term, he should knkw what was in treasury and know already what they're able to keep.
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