By NEIL HARTNELL
Tribune Business Editor
The Chamber of Commerce’s chief executive yesterday voiced confidence in the government’s ability to “circle the wagons” and hit its $237m full-year deficit target.
Jeffrey Beckles told Tribune Business that while a half-year deficit equivalent to almost 73.4 percent of the full-year target was sufficient cause for “concern”, he was optimistic the Minnis administration will “do all that is necessary” to meet its 2018-2019 goals.
He added that besides meeting the legal mandate imposed by the Fiscal Responsibility Act, achieving these targets would both “breed confidence” in the government’s fiscal management and send a signal internationally - especially to investors and the credit rating agencies - that The Bahamas is serious about putting its public finances in order.
“I believe the Ministry of Finance is capable of circling the wagons to make sure they don’t go over it,” Mr Beckles said of the $237m full-year deficit target, which is equivalent to 1.8 percent of projected GDP.
“I have confidence they’ll do what is necessary to ensure they finish the year at their projected number and, if they have to go over it, it’ll be by a very small percentage. They understand they can’t go over it, and will do all that is necessary to do that as that breeds confidence.”
Underscoring why it is important for The Bahamas to hit its fiscal goals, Mr Beckles added that it would have a significant bearing on “business community confidence in how they manage the deficit”.
And he added: “It’s critical to our global reputation. We can’t afford to go over it, we can’t afford to not be seen to be taking debt management seriously. I think they’ll manage it and finish strong and in a reasonably good position.
“I believe that if they see any negative trends after the first quarter of this year they will take steps to curb it, and I have confidence they will do just that. It’s that important.”
The Government has used up almost three-quarters of its full-year deficit in the first six months of the year, and collected just 38.1 percent of its $2.651bn revenue target.
While it now has to collect more than $1.6bn in revenue during the second half of the 2018-2019 year to hit its full-year goal, but Mr Beckles said this number was still attainable due to the traditional “spurt” in taxes traditionally generated during the January to March period.
“The $1.6bn is a big number but the Government still has a chance to collect it and I believe they will based on what I have seen so far from their initiatives,” he told Tribune Business.
“The first six months seems to be lagging behind, but there’s reason to be optimistic based on some of the trends and some of the initiatives the Government has put in place to collect revenue and rein in the expenditure side.
“The Government is doing a better job of going after revenue, and revenue collection seems to be up. Some of the announcements made by government, and those intended to be made in the coming weeks, bode well for confidence.”
The Government’s first-half revenue collection percentage goal is not wildly out of line with previous years. Research by Tribune Business, using official government data, shows that first half revenue collections equalled 39.3 percent and 40.9 percent of the full-year targets for 2016-2017 and 2017-2018, respectively. And it was ahead of the 36.7 percent at the half-way point for 2014-2015.
The bulk of the Government’s revenues are traditionally earned during the second half of a fiscal year that coincides with the peak winter tourism season, business license fees, the bulk of real property tax payments, and commercial vehicle licensing month in March.