The Tribune

BY FAY SIMMONS

TRIBUNE BUSINESS REPORTER

jsimmons@tribunemedia.net

THE OPPOSITION is questioning the credibility of the Davis administration's fiscal projections after the Fiscal Responsibility Council flagged a mismatch between Government's debt forecasts and its actual borrowing and repayment plans.

Kwasi Thompson, the Opposition’s finance spokesman said the findings in the latest FRC report raise serious concerns about the Government's management of the nation's finances, arguing that “too many of the Government's numbers do not add up” and that too many projections bear little resemblance to actual fiscal performance.

The FRC found that Government's financing figures imply a net reduction in liabilities of $119.5m during FY2026/27, while its medium-term fiscal and debt outlook projects a $289.8m reduction in Central Government debt over the same period.

The council said a revision of the debt projections in the medium-term fiscal outlook was necessary and also raised concerns over the absence of a medium-term financing forecast in the Fiscal Strategy Report.

Mr Thompson said the debt concerns form part of a wider problem with the Government's fiscal projections, pointing to revenue forecasts that he said had become increasingly disconnected from actual collections.

After nine months, he said Government still needed approximately $1.54bn in revenue during the final three months to reach its FY2025/26 target.

“The FRC exposes just how far the Government's revenue forecasts had moved away from actual performance,” said Mr Thompson.

He also pointed to the Government's projected surplus, noting it needed approximately $190.1m in surplus during the final three months to achieve its projected $32.7m annual surplus.

“It is budgeting on hope and asking Bahamians to believe projections even when the actual collections are telling a different story,” he said.

Mr Thompson said the Government has a responsibility to provide Parliament and the public with an accurate picture of the country's fiscal position.

“When its forecasts are this far removed from actual performance, it damages the Government's credibility and undermines public trust in the numbers it presents,” he said.

The FRC's concerns extend beyond the debt and revenue forecasts.

Mr Thompson also criticised changes made to the Government's fiscal projections through the Supplementary Budget after the original Budget had already been presented and debated in Parliament.

The Supplementary Budget increased projected revenue by approximately $196.5m and planned expenditure by approximately $239.2m.

According to the FRC, those revisions came with “no accompanying notes or explanations.”

Mr Thompson said the changes undermined parliamentary scrutiny.

“Government cannot present one set of numbers to Parliament, defend those numbers, secure parliamentary approval and then materially change the fiscal picture without properly explaining what happened,” he said.

He added that if the Government's original assumptions were wrong, it should admit it, while if circumstances changed, those changes should be explained.

The FRC has also raised concerns over the Government's medium-term debt projections.

The Fiscal Strategy Report projects Central Government debt declining from $11.387bn, or 64.6 percent of GDP, at end-FY2025/26 to $10.487bn, or 52.2 percent of GDP, by end-FY2028/29, with the Government targeting debt of 50 percent of GDP or less by FY2030/31.

However, the FRC noted that the debt sustainability analysis contained in the same fiscal documents produces different projections, with debt-to-GDP falling to 49.1 percent by end-FY2028/29 and 39.9 percent by end-FY2030/31.

The council also said the absence of projected medium-term financing information in the Fiscal Strategy Report represented non-compliance with the Public Finance Management Act's requirement for the report to include “a summary of the sources of budget financing.”

Mr Thompson said the FRC's findings demand a full response from the Davis administration.

He added that the Opposition would have more to say on the FRC's findings involving Government debt, arrears, State-Owned Enterprises, guarantees, contingent liabilities and the credibility of the Government's overall fiscal strategy.

“This is only the beginning,” said Mr Thompson.