By NEIL HARTNELL
Tribune Business Editor
Contract worker terminations and early retirements enabled the Government to slash its civil service wage bill by $20m during the fiscal year's first quarter, it was revealed yesterday.
The Ministry of Finance's "snapshot" of the three months to end-September 2018 revealed that the total compensation paid to the civil service, including allowances and National Insurance Board (NIB) contributions, fell by 10.4 percent compared to the same period in the prior year.
"Compensation of employees was significantly lower by $20m at $171.9m," the report for the 2018-2019 fiscal year's first quarter revealed. "The largest component, wages and salaries, declined by $15.8m to $153.7m, reflecting a combination of deliberate measures taken by the Government to rationalise contractual employment arrangements alongside the impact of retirements.
"Meanwhile, timing-related factors in the payment of overtime to the security forces explained the $3.6m reduction in allowances. Based on the decline in employment complement, the employer's [Government] NIB contribution was reduced by $0.6m to $7.4m."
The report suggests the lay-offs and early retirements initiated by the Government shortly after taking office are beginning to have their desired effect in curtailing a public sector wage bill that grew by $226m over the previous seven years, although those impacted will not see it that way.
Elsewhere, the Ministry of Finance report revealed that the Government invested a total $37.5m, inclusive of the $30m purchase price, in acquiring the troubled Grand Lucayan resort during the fiscal year's first quarter.
"Government's financing transactions included an additional $6.6m allocation to sinking funds established to assist with future debt repayment," the document said. "Government also invested $37.5m in its recently-established special purpose vehicle, Lucayan Renewal Holdings, for the purpose of meeting the initial $30m deposit and other related payments for acquisition of the Our Lucaya Hotel and related properties in Grand Bahama.
"The total purchase price was $65m, with the balance, $35m, being sourced via a loan from the vendors [Hutchison Whampoa], supported by a government guarantee."
The Ministry of Finance report also exposed how Bank of The Bahamas continues to drain Bahamian taxpayers even after two bail-outs and a $40m rights issue that, combined, will cost the Public Treasury $300m-plus and counting.
With the Bahamas Resolve unable to raise enough funds by selling the real estate that secured Bank of The Bahamas' former toxic loans, the Government has had to step in to pay the interest due to the BISX-listed lender on the $167.7m in bonds that filled the hole on its balance sheet.
"The Government provided $5.7m to Bahamas Resolve to assist with payment of interest on its $167.7m promissory note to the Bank of The Bahamas, partially settled contingent liabilities with the Bank of The Bahamas related to the hurricane loan and student loan programmes totalling $6.4m; and extended an additional $4.9m in subventions to several public corporations," the Ministry of Finance report added.
K P Turnquest, deputy prime minister and minister of finance, yesterday hailed the report's publication as "an historic first" that sets an "unprecedented standard of transparency in public finances" by introducing quarterly reporting on the Government's finances.
He said in a statement: "The in-year quarterly budget performance, reporting on the central government's revenue, expenditure and financing operations, allows the Bahamian people to understand and track the financial health of the country. It aligns with global fiscal disclosure standards and best practices.
"Performance reporting is not about popping champagne when we are happy with our progress and burying the numbers when we are not. Performance reporting is about full disclosure. It is about upending the culture of closed government and promoting transparency instead."
He pledged that the Ministry of Finance was "proactively working to set a new model for good governance" that involves "building a culture of openness, access to information and engagement". Mr Turnquest, though, acknowledged that producing change - "especially within large bureaucracies" - would take time.
He also warned against reading too much into the 2018-2019 first quarter numbers as they had yet to emerge into a solid long-term trend, although the performance was "certainly moving in the right direction" when compared to the same period in 2017.
"Naturally we are happy to see that revenue is up, the deficit is down by more than 50 percent year-on-year, and growth in overall expenditure was less than 1 per cent," Mr Turnquest said. "But we ought not to read too much into the numbers at this point because it is the first quarter; there is still a lot of hard work to do.
"Nonetheless we are cautiously optimistic that the Government is on track to meet its fiscal targets, which called for a substantial reduction in our annual deficit. We must contain expenditure growth, improve the revenue yield and continue smart capital investments with scarce public funds. The Ministry of Finance will stay focused on this critical mandate."