The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government is pledging to reform the Fiscal Responsibility Act by expanding its scope to further boost accountability and transparency surrounding how the public finances are managed.

The newly-released Fiscal Strategy Report said the Davis administration plans to amend the Act, first brought into effect in 2018, by adding target ratios for the Government’s annual revenues and capital spending as a percentage of gross domestic product (GDP). Interest payments on the Government’s debt, as a percentage of its revenue income, will be another goal that is added.

This will set additional benchmarks that the Government must meet as well as the inaugural thresholds introduced in 2018. The latter included a 0.5 percent of GDP cap, or limit, on the annual fiscal deficit that an administration can incur, as well as setting a target 50 percent debt-to-GDP ratio that it must achieve.

These goals, though, were suspended as a result of the fiscal and economic devastation inflicted first by Hurricane Dorian, and then the COVID-19 pandemic, but the Davis administration is now pledging to enhance them through further legislative amendments.

“To improve the transparency and accountability framework in The Bahamas, the Government has proposed amendments to the Fiscal Responsibility Act 2018 for tabling in Parliament in early 2022,” the Fiscal Strategy Report said.

“This improved framework will retain targets for debt, fiscal balance and recurrent expenditure as a share of GDP, but also include targets for interest, revenue and capital expenditure as a share of GDP.”

Based on the report, the Government is forecasting that the capital spending target - holding this at a sum equivalent to 3.5 percent of GDP annually - will be the first benchmark to be achieved in the 2022-2023 fiscal year.

The “fiscal balance”, via a projected surplus of $71.9m, and interest payments as a percentage of revenue, will hit their targets in the 2024-2025 fiscal year according to the Government’s timelines. And revenues and recurrent spending, as 25 percent and 20 percent of GDP, respectively, will be attained a year later in 2025-2026.

The Fiscal Responsibility Act changes are part of a broader reform package intended to “underscore the government’s commitment to good governance”. These include publishing financial information on “ministries, government business enterprises and agencies on the Government’s website, whether or not such financial information has been tabled in Parliament”.

And monthly reporting on the Government’s fiscal performance is scheduled to begin in July 2022. Matt Aubry, the Organisation for Responsible Governance’s (ORG) executive director, yesterday backed several of the reforms outlines and said the Fiscal Strategy Report 2021 has “got some merit”.

“There are definitely some things that ORG is very excited about,” he added. “The reference to institutionalising the National Development Plan (NDP), making the Fiscal Responsibility Act more specific to focus on targets for interest, revenue and capital expenditure, and the reference to capping recurrent expenditure in the long-term.

“It speaks to being able to present the information without tabling it in Parliament first so that it’s not held up. That speaks to a greater level of transparency.”

Simon Wilson, the Ministry of Finance’s financial secretary, said on Friday that the Davis administration plans to change the law so that the Government does not, as is presently required, have to table the annual Fiscal Strategy Report in Parliament and debate it before it can be released publicly.

It has, though, released the 2021 version publicly before tabling it in Parliament - something it plans to do during the mid-year Budget debate which will be held at the end of February 2022. For doing this, it came under fire last night from the Opposition, which accused it of violating the Fiscal Responsibility Act as presently set out.

“The law states in Section 10 of the Fiscal Responsibility Act 2018 that the report must be laid in the House of Assembly and then published in the public domain. It is then to be debated within the month of January,” said Kwasi Thompson, ex-minister of state for finance in the Minnis administration, via a statement.

“The Government does not have any discretion on this. Once again, we demand that the Davis administration obey the law. We demand that the report be provided to Parliament immediately and that the debate on the report takes place as required.”