Prime Minister Philip “Brave” Davis.
By RASHAD ROLLE
Tribune News Editor
PRIME Minister Philip “Brave” Davis has said he was shocked by the International Monetary Fund’s conclusion that government spending this fiscal year will outpace revenue by almost three times its projections.
“I’m shocked by that because they met with me and never raised those matters,” he said.
He said he had been busy and wasn’t aware of the IMF’s position until The Tribune asked him about it after an event to open the Turks & Caicos Government Diaspora Office last night. He is scheduled to attend the COP28 event in Dubai.
The IMF’s conclusion was contained in its annual Article IV consultation report on the country.
The body estimated that the fiscal year’s deficit would be “considerably larger than expected in the budget” at a sum equal to 2.5 per cent of gross domestic product (GDP).
The fund said more policy measures will be needed to achieve targets.
The Free National Movement (FNM) jumped on the IMF’s report to say it proves what the party has been saying about the Davis administration’s fiscal strategy and claims.
“Again and again, the opposition has warned this PLP government that its reckless and wasteful spending will worsen the country’s fiscal position at a time when rising revenues from a recovering economy should be moving the country toward a balanced budget,” East Grand Bahama MP Kwasi Thompson, the party’s Shadow Minister of Finance, said in a statement.
“Now again, the IMF, in its statement released yesterday, is now projecting that the government’s deficit for this fiscal year 2023/2024 will approach $380m, which is almost 300 per cent higher than the $131m deficit in the government’s budget and medium-term fiscal strategy. This massive projected spike in the deficit is also projected by the rating agency Standards & Poor (S&P) in its September 2023 report on The Bahamas.”
Mr Thompson highlighted that the government has not been publishing monthly and quarterly budget and fiscal reports as the law requires, with the last two quarterly reports still outstanding, as are August, September and October reports.
“It would seem that the Davis administration has been and continues to keep away the lawful reports of the shaky state of the public finances from their employer, the Bahamian taxpayer,” he said.
Economic Affairs Minister Michael Halkitis said in a statement last night that the administration has met or beat every deficit projection given over the past two years and is confident it will meet the 2024 projections.
“What you see is an opinion of the IMF that our revenue will not come in as well as we estimate that it will,” he said. “We have a difference of opinion. Remember that since 2021, we have had the IMF and the rating agencies consistently underestimating how our revenue can perform. Our experience has shown that our revenue along with the growth in the economy has performed very well. We believe that will continue.”
He said in the 2022/2023 fiscal period, the deficit was $42m below projections.
He also noted that the IMF has revised its economic growth projection for the economy to 2.3 per cent, up from 1.8 per cent.
“That’s a massive revision,” he said, adding it reflects that the economy is growing and inflation is declining.