The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government’s fiscal surplus for the key month of March 2026 shrank by 26.4 percent year-over-year, it was revealed yesterday, as revenues remained relatively flat while total spending jumped by $52.1m compared to 2025 during the run-up to the May 12 general election.

The Ministry of Finance’s report for March, which together with April typically generates the fiscal year’s biggest monthly surplus as it coincides with economic activity related to the peak winter tourism season, Business Licence fees and the bulk of real property tax payments, and commercial vehicle licensing, revealed a $48.1m decline compared to the 2025 figures.

The data disclosed that the Government’s March surplus, which measures by how much its revenue income exceeds total spending for the month, fell from $182.2m during the same month in 2025 to $134m this time around. The lower surplus was largely driven by a $52.1m surge in total spending to $303.4m, as opposed to $251.2m in March 2025, although the Ministry of Finance gave no indication of whether the increase related to pre-election spending.

March 2026’s year-over-year revenues stood relatively flat, only growing by $4m to $437.4m. The $134m surplus reduced the total fiscal deficit for the first nine months, or three-quarters, of the Government’s 2025-2026 fiscal year to $157.3m at end-March 2026 which leaves it with some work to do during the final quarter - which ends next Tuesday - to hit its forecast $75.5m yearly surplus.

The Davis administration, in unveiling the 2025-2026 Budget last May, invested significant political capital in touting the projection that it will achieve The Bahamas’ first-ever surplus post-Independence. However, it now requires a final quarter surplus of $232.8m to hit that target dead-on, although Michael Halkitis, minister of finance, voiced optimism that this target would be met in unveiling the 2026-2027 Budget.

While April, too, is normally a strong surplus month due to it also coinciding with peak Easter tourism and economic activity, May and June have traditionally incurred deficits. The latter month, in particular, is known for government spending exceeding revenues as ministries, departments and agencies rush to submit bills for payment that the Ministry of Finance often know nothing about prior to the fiscal year.

However, the first Davis administration confounded these historical trends last year by generating monthly surpluses of $29.2m and $25.4m, respectively, for May and June 2025. This enabled the Government to come within less than $10m of its full-year deficit target, finishing at $78.9m as opposed to the $69.8m goal, which sparked Opposition suspicions that it had merely kicked multi-million accounts payables over into the subsequent 2025-2026 fiscal year.

Under the Government’s system of modified cash-based accounting, there is nothing to prevent the Government from doing this, although the Free National Movement (FNM) alleged it used the payables to contrive an outcome where it came sufficiently close to target to avoid triggering the Public Finance Management Act’s fiscal responsibility levers that require a corrective plan to be presented to Parliament if the deficit target is missed by a sum equal to 0.5 percent of gross domestic product (GDP).

“Preliminary data on the fiscal outturn for March 2026 show an estimated surplus of $134m, approximately $48.1m (26.4 percent) below the surplus recorded in March 2025,” the Ministry of Finance said. “This outcome reflected a comparative modest rise in revenue receipts of $4m (0.9 percent) to $437.4m alongside a $52.2m (20.8 percent) increase in expenditure to $303.4m.”

The March 2026 fiscal report also further signalled that the Government is struggling to meet many of its revenue targets for the 2025-2026 fiscal year, with collections for many taxes below 75 percent of the full-year goal with three-quarters of the period gone.

VAT, the Government’s major revenue earner, was largely on track with 73.1 percent of the $1.525bn full-year target collected at $1.114bn. Also ahead were taxes on the use of, and permission to use, goods which had achieved 81.3 percent of the full year’s $336.4m target to stand at $273.6m. Other revenue lines, though, had not fared so impressively.

Total revenues, which hit $2.552bn at end-March 2026, were less than two-thirds or 65.5 percent of the $3.896bn full-year target. Tax revenues stood at a similar end-March 2026 threshold of 66.7 percent, with $2.92bn of the full year’s $3.439bn goal achieved.

Real property tax revenues had reached 62.9 percent of the full-year goal, having hit $160.1m at end-March compared to the $254.6m Budget target, while taxes on international trade and transactions (Customs duties) stood at 63.8 percent of target at $620m compared to $972m. The Government, though, has contained the deficit by sticking largely to its expenditure targets - the side of the Budget it has more control over.

“Tax revenue expanded year-over-year by $7.7m (2 percent) to $394.7m,” the Ministry of Finance said of the March 2026 fiscal performance. “Taxes on use and permission to use goods strengthened by $53.2m (56.9 percent) due to an increase in Business Licence fee payments.

“Taxes on international trade and transactions declined by $15.3m (16.3 percent), attributed to lower collections of excise duty taxes. VAT receipts contracted by $28.4m (22.5 percent), explained by a reduction in the realty-related component. Non-tax revenue decreased by $3.6m (7.8 percent) relative to the prior year to $42.7m amid lower payments of administrative service fees.”

As for the Government’s spending, the Ministry of Finance said: “Recurrent expenditure grew by $35.9m (15.4 percent) over the review period.Personal emoluments rose by $7.4m (10.5 percent), and were broadly-based across government ministries and departments.

“Social benefit payments increased by $5.9m (26.8 percent), reflecting disbursement under the national drug plan. Spending on goods and services was higher by $6.4m (11.9 percent) amid increased operating expenses. Other payments grew by $11.7m (44.2 percent), mainly due to outlays for insurance premiums.

“Capital expenditure rose by $16.2m to $33.7m. Approximately 97.6 percent was expended for the acquisition of non-financial assets, and the remaining 2.4 percent represented capital transfers.”

The central government’s net debt also increased by $64.2m during March 2026. “The $94.3m in proceeds from borrowings was derived almost entirely from the issuance of domestic government securities,” the Ministry of Finance report said. “Aggregate debt repayment of $30.1m was allocated between domestic (82.5 percent) and foreign (17.5 percent) currency obligations.”