The Tribune

By EARYEL BOWLEG

Tribune Staff Reporter

ebowleg@tribunemedia.net

ECONOMIC Affairs Minister Michael Halkitis said the government will not adjust its budget in response to rising oil prices linked to escalating tensions between the United States, Israel and Iran, calling it “early days” as officials monitor global developments.

Oil prices spiked immediately after the outbreak of hostilities but later moderated, Mr Halkitis said, noting that increased production from other suppliers could help stabilise markets.

“We have some of the other oil producers saying that they will increase their production to offset any disruption,” he said. “You know that Venezuelan oil is now back on the market.

“Again, when things happen, there's an immediate impact, and then there's a moderation. So what we have to do is not be fearful and I never say be fearful. We just be observant. Watch what is happening.”

The United States and Israel waged war on Iran, with the Middle Eastern country’s Supreme Leader Ayatollah Ali Khamenei killed in coordinated strikes. International media reported surging oil and gas prices amid continued attacks in the region.

The developments came days after the Davis administration unveiled its midyear budget.

Mr Halkitis said officials hope the hostilities will end quickly, but warned that any prolonged disruption to regional oil supplies could raise costs across the import-dependent Bahamian economy.

Higher oil prices can affect fuel, transportation and shipping costs, increasing the price of imported goods and placing pressure on businesses and consumers.

Pressed on whether the government might revise its fiscal plans, Mr Halkitis said officials are taking a wait-and-see approach.

The midyear budget revealed that unpaid government invoices and arrears rose sharply over the past year. Outstanding obligations increased by 97.6 percent, or nearly $120m, to reach $241.898m by the end of 2025.

Mr Halkitis said the midyear deficit is still lower than the level recorded during the same period last year and maintained that the government remains on track to meet its fiscal targets after achieving a deficit of 0.5 percent of gross domestic product in the previous fiscal year.

“This is a normal feature of the Bahamian economy and Bahamian budget, in that the bulk of our revenue is collected in the second half,” he said. “Things like business licenses, bank fees, road traffic fees, property taxes, they have concentrated in the second year. So if you look last year, we had the same conversation. The year before, I think we had the same conversation, and we are confident that we are on target to meet our targets.”

The minister also pointed to geopolitical developments in the wider region that could affect The Bahamas in other ways.

He said a tightening of the blockade in Cuba could increase the risk of migration by sea as people attempt to leave the island, though he does not expect it to have a significant economic effect on the country.