By KHRISNA RUSSELL
Deputy Chief Reporter
DESPITE increased revenue and a real economic growth of 1.8 per cent, Deputy Prime Minister K Peter Turnquest said there are still tens of millions of dollars in remaining commitments left behind by the previous Christie administration that need to be satisfied.
For the first half of the fiscal year, revenue collection was up by $25m, overall spending not related to debt redemption was down $67m, and the full GFS deficit position has improved by $92.3m, all occurring while the government paid off tens of millions in bills left behind by the former government, he said.
Pointing to $30m in verified payments and arrears over and above what was known during the budget exercise last May, the finance minister said situations like this have resulted in the GFS deficit at the midyear already representing 61 per cent of the $233m full year deficit that had been previously projected.
To a large extent, he said, this reflects the ongoing overhang of the previous government, resulting in the Minnis administration’s obligation to make provisions to settle overdue debt.
In addition, Mr Turnquest said despite the 10 per cent across the board cut at all government agencies – announced by Prime Minister Dr Hubert Minnis last year – there was a $15m increase on spending on personal emoluments or salaries and allowances. These totalled $373m as compared to the $358m expended in the corresponding period of 2016-2017. The minister said this was mainly due to a recent industrial agreement-related lump sum payment of $7.7 million and outstanding overtime payments to the Royal Bahamas Police Force of $6m.
Nonetheless, Mr Turnquest said the finances of the country are in a far better place than they were at the mid-point of the last financial year.
The aggregate GFS deficit for the first six months of the current fiscal year totalled some $198.0 million, down sharply from the deficit of $290.3 million recorded by the previous administration at the mid-point of the 2016-2017 fiscal year, he told Parliament.
“I am pleased to advise that present estimates indicate that the economy recorded real growth on the order of 1.8 per cent in 2017. This renewed buoyancy stemmed primarily from construction activity associated with ongoing foreign investment projects, as well as rebuilding work in the wake of the hurricanes,” Mr Turnquest said yesterday during the mid-year budget presentation which reviews economic development for the last six months ending December 31, 2017.
“While the rate of unemployment did rise marginally between May and November of last year, it still stood fully 1.5 percentage points lower than a year earlier. All of the islands surveyed also posted lower rates of unemployment than had been experienced in November 2016,” Mr Turnquest also noted.
“Prospects for the economy in 2018 are for yet further strengthening of activity, with real growth estimated at 2.5 per cent. Conditions in the labour market are consequently also expected to improve. These developments will be underpinned by the completion of Baha Mar’s phased opening and by various foreign investment-related projects.”
He said the government expects the growth of both the tourism sector and the national economy to be favourably impacted by stronger projected growth in the United States.
In its latest forecast, the IMF has boosted its forecast for US growth by 0.4 percentage points, to a level of 2.7 per cent. The increase in investor and consumer confidence in the United States – the Bahamas’ most important trading partner - augers well for continued growth in tourist travel to, and investment interest in, the Bahamas, he said.
“The recurrent expenditure number at the mid-year of $1.79bn appears to show a sharp increase in recurrent expenditure. This is occasioned, however, by the spike in the debt redemption or debt repayment of over $540 million when compared to the same point last year – also illustrated in the summary report.
“This significant bump up in debt repayment was due to the repayment of short term financing obtained to meet immediate financing needs in anticipation of the $750m bond secured by the government.
“When you adjust for the debt repayment numbers in both years, one would readily observe that total government expenditure – both recurrent and capital - at the midpoint of the current fiscal year is $1.078bn as compared to $1.146bn last year, indicating a decrease in spending of some $67.5 million.
“This coupled with an increase in revenue collection of $24.8m is what has led to the improvement in the deficit position by some $92.3m.
“That said, this year’s GFS deficit at the mid-year does, however, represent some 61 per cent of the $323 million full-year deficit that had been projected in last May’s budget communication.”
Mr Turnquest has urged ministers and departments to redouble vigilance through the second half of the fiscal year, to ensure the government meets its desired expenditure and deficit targets.
“The $92.3m improvement in the GFS deficit in the first half of this fiscal year, as compared to the previous year, largely reflected a deliberate $76.4m reduction in capital expenditure, from $152.2m last year to $75.8m this year. This fiscal year, the government has exercised extreme prudence in the commitments for capital expenditure, ensuring that only meaningful and critical public investments are approved.
“That said, we acknowledge that our public infrastructure plant, in too many cases, remains well below the standards for a 21st Century Bahamas. The government commits, over this term in office, to find creative and efficient ways to substantially increase productive investments in our hospitals, schools, clinics, airports and digital infrastructure, to allow for the sustained social and economic development of Bahamians throughout the full archipelago.”
These investments, he said, will be critical to underpin the much-needed improvements in productivity, boost the growth potential of the Bahamian economy and thereby contribute to enhanced job opportunities for our citizens.