The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition has called for “full transparency and legal clarity” on the Government’s moves to place $700m net borrowings in the National Investment Fund and the “crystallisation” of $43m in public-private partnerships (PPPs).

Michael Pintard, the Free National Movement (FNM) leader, in separate letters to Michael Halkitis, minister of finance, called for the second Davis administration to provide “urgent clarification” on both issues following last week’s 2026-2027 Budget presentation and release of the Fiscal Strategy Report.

On the $700m proceeds, Mr Pintard urged the Government to provide “a detailed schedule of all borrowing instruments, approvals and resolutions” by Parliament that authorised borrowings in excess of debt repayments during the 2025-2026 fiscal year. And he also called on the Government to provide “the legal authority under which these excess funds were transferred from the” Government’s consolidated fund to the National Investment Fund.

“We note that under the Public Debt Management Act, all borrowed funds must be paid into the consolidated fund, and under the Public Finance Management Act, withdrawals from that Fund require lawful parliamentary authority. These are not optional requirements; they are mandated by law,” the Opposition’s leader asserted.

“It is our expectation that the Government will not and cannot use monies deposited in the National Investment Fund as a means to fund routine and regular infrastructure projects, including current initiatives for roads, medical facilities and airports outside of the budgetary and procurement framework, and in the absence of any prescribed investment criteria and strategy for the National Investment Fund.

“This request is made in light of the requirements for transparency and accountability in public spending under the Public Finance Management Act, particularly where expenditures may occur outside traditional Budget presentation channels.”

Mr Pintard, voicing concern that no details have been released on the National Investment Fund’s Board members, added: “If either the Board doesn't exist or if its composition is hidden from the public, there is no defensible means for any public funds to be moved to or through any National Investment Fund structure.

“We further note that it is our informed view that transfers into the National Investment Fund requires explicit parliamentary authorisation via an appropriation from Parliament. If there is none, kindly indicate any other lawful mechanism available to the Government to move borrowed funds from the consolidated fund into the National Investment Fund outside of the constitutionally required appropriations mechanism.”

And he continued: “We note that the National Investment Fund Act requires adherence to the Santiago Principles, which establish core standards of transparency, legal clarity and independent governance. On the information presently available, the Government's actions raise serious concerns of non-compliance.

“The absence of clear disclosure regarding the source, transfer and use of funds undermines transparency. Any transfer of borrowed funds to the National Investment Fund without explicit parliamentary authority calls into question the legality and accountability of those transactions, and the apparent lack of demonstrable governance structures or separation between fiscal operations and fund management is inconsistent with the required standards of institutional independence.

“Further, if National Investment Fund activity has the effect of obscuring the true fiscal position or shifting spending outside the ordinary Budget framework, this would be fundamentally inconsistent with the purpose and operation of the Santiago Principles as incorporated into the Act.”

As for the PPP liabilities, Tribune Business reported yesterday how the Fiscal Strategy Report 2026 had revealed more than 30 percent of $140m in PPP funding has now “crystallised” on the Government’s books as a debt that has to be repaid by Bahamian taxpayers.

The document, released alongside the 2026-2027 Budget that was unveiled last week, reveals that some $43.1m of the $140m PPP funding that the Africa Export-Import Bank has provided for road infrastructure upgrades on Eleuthera and Cat Island has now become a liability that the Government has to repay from the Public Treasury.

“The Government faces a potential contingent liability of $140m arising from financing arrangements with the African Export-Import Bank in respect of public-private partnership transactions with Bahamas Striping and Cat Island Infrastructure Company. At the time of preparation of this report, approximately $43.1m of this liability has crystallised in respect of these arrangements,” the Fiscal Strategy Report said.

The disclosure is likely to reignite the debate over many of the Government’s PPP deals with the Opposition having repeatedly charged that most are, in reality, ‘off the books’ loans designed to keep borrowings from adding to the annual deficit and national debt by ensuring they are kept off the balance sheet of the Bahamian public finances.

Mr Pintard, in his letter to Mr Halkitis, called for the Government to provide the loan agreements, borrowing resolutions and any guarantees authorising the Africa Export-Import Bank financing. “The inclusion of both interest and principal payments in the 2026-2027 Budget for obligations related to the African Import-Export Bank PPP arrangements suggest to us that the Government is treating this exposure as an actual obligation of the state,” he wrote.

“If the $140.1m potential liability, and the $43.1 million crystallised liability, refer to another set of obligations outside of anything related to the African Import-Export Bank initiatives, we request similar illumination as to the relevant elements that have now become the obligation of the Bahamian people.”

Budget documents released last week showed that some $417m worth of such deals as either active or proposed. Apart from Bahamas Striping’s roadworks projects on Eleuthera and Exuma, valued at $180m and $62m, respectively, these also include Cat Island Development Company’s $124m road upgrade and pipeline works on Cat Island, plus similar $52m and $19m works on San Salvador and Mangrove Cay, Andros.

The African Export-Import Bank is financing both the Eleuthera and Cat Island road upgrades. Bahamas Striping previously announced that its arrangement was structured as an “accounts factoring” deal, which typically involves a company selling receivables or monies/debts owed to it to a third-party. This has the benefit of freeing up cash flow and liquidity, while the third-party now has the job of collecting payment.

In the case of Bahamas Striping, this implies that Africa Export-Import Bank is providing the necessary financing to complete the Eleuthera improvements and has stepped into the company’s shoes when it comes to receiving payment from the Government. This suggests that Africa Export-Import Bank, rather than Bahamas Striping, will be collecting the loan repayments from the Government.

The 2026-2027 Budget shows that the Bahamian Government is already making interest payments to Africa Export-Import Bank. Some $316,751 worth of interest was paid to the African lender during the 2024-2025 fiscal year, with a further $308,137 expended during the first nine months of the present 2025-2026 fiscal year despite no provision having been made for the latter when the previous Budget was passed in June 2025.

Moving forward, the Government is shown as making six-figure interest payments to the Africa Export-Import Bank for the next three years, with some $532,362 due in the upcoming 2026-2027 fiscal year. And, starting this year and continuing for each of the subsequent two Budget years, the Government will be repaying the African lender some $1.67m in principal as well.

The only loan where the Government has obtained Parliamentary approval to borrow from the Africa Export-Import Bank is the $1.9m associated with the Afro-Caribbean Marketplace project targeted for the International Bazaar site in Freeport. Several sources, speaking on condition of anonymity, are questioning how the repayments can now be appearing on the Government’s books given both the nature of a typical PPP deal and that Parliament has seemingly not authorised the necessary borrowing resolution.