The Tribune

By LEANDRA ROLLE

Tribune Chief Reporter

lrolle@tribunemedia.net

PRIME Minister Philip “Brave” Davis said yesterday that a sharp rise in government arrears and unpaid invoices reflects active project execution, support for essential services and seasonal cash flow pressures, not overspending.

He addressed the issue after documents tabled in the House of Assembly showed that the government’s outstanding balances to suppliers, vendors and other service providers had nearly doubled, rising from $122.4m on December 31, 2024 to $241.9m.

Of the total, he said $60.5m represents arrears carried over from prior fiscal years. The remaining $181.4m consists of unpaid invoices from the current fiscal year, which are typically settled within 90 days.

The Ministry of Works recorded the largest liabilities, he said. The ministry owed $46.3m in unpaid capital expenditure invoices and $21.5m in arrears, for a combined $68.1m. The Water & Sewerage Corporation accounted for $38.1m in unpaid invoices. The Ministry of the Public Service recorded $18.251m in arrears and $6.1m in unpaid invoices, bringing its total outstanding balance to $24.3m as of December 31, 2025.

Mr Davis linked much of the increase to activity at the Ministry of Works, which is responsible for roadworks, drainage management, building maintenance and major infrastructure projects, including airports, clinics and schools.

He said $24.4m in arrears and unpaid invoices were tied to the Ministry of the Public Service for office rent and building maintenance. Another $12.7m was attributed to the Ministry of Finance for capital projects and vehicle and equipment fees. The Department of Information and Communications Technology accounted for $10m for network support and cable services.

“This level of outstanding balance reflects the interaction of project execution, support for essential services, and seasonal cash flows,” he said.

“The government is strengthening commitment controls, improving cash forecasting, and prioritising structured arrears reduction – all within the broader fiscal consolidation framework to maintain debt sustainability and deficit reduction targets.”

Mr Davis said that if obligations to public corporations are excluded, the increase in outstanding balances at the end of December 2025 would have been about $29m.

Beyond the immediate figures, he said the government is also addressing longstanding fiscal vulnerabilities tied to state-owned enterprises and contingent liabilities.

He said financial losses within state-owned enterprises and the government’s role as guarantor for certain loans pose risks to the national budget, as those obligations can ultimately fall on the public purse.

However, he said the administration is tackling the issue through structured training programmes for directors of state-owned enterprises and by introducing a comprehensive guarantee policy framework.

Mr Davis also acknowledged mounting pension obligations as “another pressing fiscal challenge.”

Public service retiree obligations are projected to reach $4.1b by 2032. Pension and gratuity payments already account for nearly 6.2 percent of recurrent expenditure for the six months to December 2025.

Mr Davis said the government plans to address the issue through comprehensive pension reform legislation.

He said the finance minister has prepared a white paper outlining what he described as a “comprehensive and carefully considered policy framework.”

“Under the policy framework both employees and, the employer, which is the government, will contribute under a rate framework that will be determined,” he said.

“Contributions will be credited to individual pension accounts, protected against negative investment returns. It provides for immediate vesting of employee contributions, graduated vesting of employer contributions, and flexible retirement benefit options, including lump-sum payments or lifetime annuities. In cases of death or permanent disability, accrued benefits will be payable to the employee or designated beneficiaries, ensuring security for families and dependents.”

Mr Davis also pointed to rising public sector wages.

He said total public sector salaries have grown from $738.4m when his administration took office to a projected $937.9m in the current fiscal year.

Base salaries have increased from $649m to more than $807m. Allowances have also been adjusted to address recruitment challenges and the same cost-of-living pressures facing working Bahamians.