The Tribune

By LEANDRA ROLLE

Tribune Staff Reporter

lrolle@tribunemedia.net

FINANCIAL Secretary Simon Wilson yesterday described the nation’s fiscal performance for the first quarter as “very encouraging”, saying while officials see no reason why this positive trajectory can’t continue, they must also remain cautious due to the possibility of a recession, among other factors.

Mr Wilson pointed to increased revenues and decreased expenditure as he provided an overview on the nation’s first quarter performance for the 2022-2023 fiscal year.

“Revenue collections for the first quarter of the fiscal year was estimated at $654.3m, which is a 9.7 increase over the previous year’s quarter,” the financial secretary said during a press briefing at the Office of The Prime Minister yesterday.

 “The key improvements were VAT, which increased by $35.4m, departure tax by $26.9m and exercised duties by $23.6m, stamp tax of financial transactions – $1.8m.

 “Expenditure decreased by $58m or 7.9 percent in comparison to the previous year’s first quarter. This represents 20 percent of the budget target so expenditure is in line with the budget target and what drove the expenditure increase was a $13.2m decrease in subsidies which decreased by $16.7m, use of goods and service decreased by $13.2m.

 “Social assistance for COVID-19 continued to decline. That decreased by $41.9m against the previous year quarter, which was very elevated. Obviously, because of the higher debt burden, we saw an increase in interest debt payments of $10.5m and we saw an increase in pension gratuity payments.

 “So, in the first quarter, if you would recall, the government signed a number of industrial agreements, reinstated increments and promotions and really tried to deal with the issue of arrears to public officers.”

 He noted an overall decline in the fiscal deficit for the first quarter when compared to the same period in the previous fiscal year.

 He added: “So overall, the fiscal position for the first quarter was very, very encouraging.”

 When asked if officials expect this positive trend to continue, Mr Wilson said he was both optimistic and cautious for several reasons.

 He said: “We see no reason why it can’t continue but, however, there are possible headwinds. Obviously, the global economy represents risks. Elevated prices for fuel, which impacts both BPL and the Water and Sewerage Corporation, represents a risk that we have to manage very carefully.

 “And the potential of a recession, which may impact tourism numbers is a risk but overall, you know, on the revenue side, it’s been very, very encouraging. If you know our revenue is cyclical.

 “Most of our revenue comes in during the third and fourth quarter fiscal period so, we look forward to that - but we don’t want to celebrate too quickly. It’s a work in progress, I say.”

 Mr Wilson also explained that a spike in illegal migration could “throw off the budget” tremendously given the feeding and transportation costs associated with deportation exercises.

 As for how the government will maintain this positive financial performance given the announced rise in minimum wage, Mr Wilson noted the government was trying to make “smart investments and lower operating costs” going forward.

 “So, this month, hopefully, we will bring all public officers up to the minimum wage - so all public officers by the end of November payday will be at or above minimum wage,” he said. “All arrears of public offices will be paid so we built that into our budget you know.”

 He also estimated some $3m in arrears owed to roughly 3,000 civil workers “whose salary was below the minimum wage.”

 “In terms of what’s happened with BPL increase, which is a staggered increase over 18 months. One of the things that I think that was said, and I’ll repeat it, is the reason why you stagger the increases is to allow persons a chance to adjust behaviour to lower the costs.”

 Mr Wilson continued: “So, for example, you may have seen the Ministry of Finance with BPL is going through a street lighting project – changing the street lights and so forth. That’s going to lower electricity costs.

 “In addition, we have in today’s paper for example, we have issued an RFP for rooftop solar which is a big part of our plans. Again, all those things have been done to really balance things out and making smart investments to reduce cost, operating costs going forward.”

 Economic Affairs Minister Michael Halkitis previously said that officials in finance remained “cautiously optimistic” that The Bahamas would not enter a recession as he pointed to it being in the midst of a very strong economic rebound led by tourism.

 “My take is we don’t claim it,” he said last month. “We don’t claim recession, all right. There are different opinions. Some people think we’re already in it. Some economists say that, you know, it’s going to happen.

 “Our experience is that we are in the midst of a very strong rebound in our economy led by tourism,” he also said.