The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government incurred a near-$40m deficit during August 2022 as it reclassified almost $35m of revenues earned in July as VAT, Ministry of Finance data released yesterday revealed.

The report on August’s fiscal performance showed that the prior month’s VAT intake, shown as $105.5m when the July equivalent was released barely weeks ago, has now been increased to $140.1m - a 32.8 percent increase. This corresponded with a revision in revenue from “other taxes on goods and services”, which fell from $49.1m in the July report to just $15.7m in the latest publication.

No explanation was provided for the switches, with the Ministry of Finance in a statement confirming that the Government incurred a $39.7m fiscal deficit for August with the country’s debt rising by a more modest $8m. Still, the $41.3m surplus recorded for July is sufficient to keep the Government in a $1.6m surplus position - meaning revenue income has exceeded total spending - for the first two months of the 2022-2023 fiscal year.

“During the month, revenues increased by 9.4 percent ($17m) to $197.8m compared to the prior year,” the Ministry of Finance said. “The improved performance is largely attributed to an increase in revenue collection from international trade and transaction taxes ($12.4m), other taxes on goods and services ($5.2m), sale of goods and services ($5.9m) and VAT receipts ($3.9m).

“However, month-over-month, revenues decreased by 24 percent ($62.6m) largely due to seasonal trends of lower VAT receipts ($50.6m) for August relative to July as domestic consumption eases with more summertime travelling.” The release, though, ignored the fact that July’s VAT filings include quarterly as well as monthly registrants, while August only involves the latter.

“Total expenditure increased by 6.9 percent ($15.3m) to $237.4m compared to the prior year, owing to increased outlays on the use of goods and services ($10.2m) and subsidies ($12.9m),” the Ministry of Finance added.

“As economic activity further trend to pre-COVID levels, COVID-19 specific social assistance payments were lower ($9.7m) year-over-year. Compared to the prior month, August 2022 expenditure increased by 8.4 percent ($18.4m) mostly due to additional disbursements for the acquisition of non-financial assets ($21.3m).”

August’s deficit was said to be a 4 percent or $1.7m decline compared to the prior year. “Central government’s net debt increased during the period by $8m, and accounted for a 92.2 percent ($95.4m) decrease from the prior year, as a net result of $82.8m in borrowings and $74.8m in repayments,” the Ministry of Finance added.

“Proceeds of borrowings during the period totaled $82.8m, sourced by $12.7m in Bahamas Registered Stock, $50m in Central Bank advances and $20.1m in Treasury Bill placements. Repayments totalled $74.8m, primarily driven by repayments of $50m for Central Bank advances and $20.5m for foreign currency bank loans.

“Revenue receipts totalled $197.8m, a 9.4 percent ($17m) increase year-over-year. Aggregate expenditure equated $237.4m, a 6.9 percent ($15.3m) increase compared to the same period of the prior year. Recurrent expenditures increased 7.9 percent ($15.6m) compared to the prior year and totaled $212.7m,” it continued.

“Capital expenditures declined 1 percent ($0.2m) to $24.7m and included $23.1m to acquire non-financial assets and $1.6m in capital transfers.”