The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition’s leader yesterday urged the Government “to cite what law they are following” after it was revealed that $700m in net new borrowings, or debt, has been transferred to the National Investment Fund.

Michael Pintard told Tribune Business that disclosures during the 2026-2027 Budget’s unveiling raised questions over whether the Davis administration is using the correct legal mechanisms to effect such a move or if this was merely to keep new debt off the Government’s balance sheet so it did not blow the forecast $75.5m Budget surplus for the present fiscal year.

He spoke out after Michael Halkitis, minister of finance, told the House of Assembly: “Our improvement is reflected in the increased borrowing and debt repayment activity during the year, driven mainly by our ongoing financing operations and the rollover of short-term obligations as they matured.

“Our gross borrowings during the nine months in the fiscal year [to end-March 2026] amounted to $2.5bn, while our debt repayments totaled $1.8bn. However, the excess borrowing receipts were transferred to the National Investment Fund and not used for deficit financing. This underscores our commitment to meeting our obligations, maintaining our targets and fostering stable fiscal consolidation.”

The Government thus appears to have followed the template established last year, where $265.3m of the surplus $300m generated by the $1.067bn external foreign currency bond issue were placed into the National Investment Fund to help finance critical infrastructure projects. And it also treated the $265.3m as “equity” even though it seemingly represented the proceeds of borrowing given that a bond is a debt security, or IOU, obligating the issuer to repay investors interest and principal.

Mr Pintard yesterday reiterated the Free National Movement’s (FNM) arguments, made at that time, that such a move - as well as the $700m transfer - must first be approved by Parliament via an appropriation or resolution as all borrowing proceeds must first go into the Government’s consolidated fund and cannot be removed otherwise.

“There’s a mechanism in law for how you are able to transfer funds from the consolidated fund to the National Investment Fund,” the Opposition’s leader told this newspaper. “We have not heard them cite the law that authorised them to do this. They have to come to Parliament for the appropriate mechanism to do that.

“Until they do that, they are acting ultra vires, outside the law. They ought to cite what law are they following in transferring the funds. The constitution reiterates that the appropriation of funds outside the consolidated fund must go through Parliament.”

The Opposition’s objections thus lie with the mechanism the Government is using because it believes it must first, under the constitution and statute law, place all borrowing proceeds in the ‘consolidated fund’ and then obtain Parliament’s permission for how they are used.

Kwasi Thompson, the Opposition’s finance spokesman, previously voiced fears voicing fears that the Government would circumvent the provisions of the Public Debt Management Act by directing the $300m excess sovereign bond proceeds earlier this year directly into the National Investment Fund as opposed to first going into the ‘consolidated’ fund.

“Any government spending ought to be approved by Parliament,” he told this newspaper last year. “The way government spending is appropriated by Parliament is through the Budget process. The Government has to get parliamentary approval to borrow funds and to spend funds.

“The law obligates the Government to come to Parliament to get approval to spend government monies. If the Government wants $300m to invest in the National Investment Fund, which we have no difficulty with, it must be approved by Parliament. And to be approved by Parliament it must be in the Budget.”

Mr Pintard yesterday argued that government debt has not been reduced but only “shifted”. He said: “Increasingly, public debt is not sitting transparently on the Government’s balance sheet. Instead, it is being pushed into state-owned enterprises, disguised as loans, buried in long-term contracts, and parked in financing arrangements that do not show up clearly in the Budget numbers presented to Parliament.

“This does not make the debt go away. It simply makes it harder for the public to see how much the country truly owes and how much future taxpayers will be required to pay… Another glaring omission from the Budget speech is the Government’s complete failure to explain why, despite an annual borrowing plan last year that clearly stated there would be no new net borrowing for the current fiscal year, the Government’s own official reports show that public debt has increased by approximately $689.2m in just the first nine months of the year.

“This figure does not come from the Opposition; it comes directly from the Government’s own public debt statistical bulletin. Bahamians are therefore entitled to ask a very basic question: How has the Government been able to borrow hundreds of millions of dollars without returning to Parliament for the necessary borrowing resolution and approval?

“And let me pre-empt any attempt to brush this aside by claiming that this near $700m was merely short-term borrowing,” Mr Pintard asserted. “We already know that this increased debt is going to crystallise as long-term debt well beyond the current fiscal year.

“This pattern reflects an administration that has consistently evaded parliamentary oversight and parliamentary authority in order to run up significant debts outside of the transparent and lawful framework required by statute. This is not accidental. It is a deliberate approach that undermines accountability, weakens Parliament’s control over the public purse, and erodes trust in the Government’s claims of fiscal discipline and responsibility.”

Mr Halkitis, meanwhile, yesterday told the House of Assembly: “Central government debt stood at $12.5bn, representing a modest increase of 6.4 percent when compared to end-March 2025. It is important to note that growth in the economy outpaced the growth recorded for central government debt stock at end-March 2026.

“External debt amounted to $5.4 bn, accounting for 43.4 percent of total central government debt. Domestic debt totalled $7.1bn, representing 56.6 percent of total debt and increasing by 6 percent relative to end-March 2025. The composition of the debt stock continues to reflect the Government’s balanced approach to financing, with domestic debt remaining the larger share of the portfolio.”

And the minister of finance added: “Government debt is projected to follow a firm downward trajectory over both the medium and long-term, declining from $11.4bn in fiscal year 2025-2026 to $8bn by 2035-2036. In relation to GDP, the debt ratio is expected to fall from 64.6 percent in 2025-2026 to 51.5 percent by 2028-2029, and further to 47.9 percent by 2030-2031.

“This places the Government on a clear path toward achieving its fiscal objective of reducing central government debt to no more than 50 percent of GDP by 2030-2031. Thereafter, the debt- to-GDP ratio is projected to continue declining steadily, reaching 30.3 percent by 2035-2036. This sustained reduction is underpinned by strong and persistent primary surpluses, continued economic growth and prudent debt management.

“The composition of public debt is also expected to improve over the projection horizon. External debt is projected to decline from $5.1bn in 2025-2026 to $2.8bn by 2035-2036, while domestic debt is expected to decrease more gradually from $6.3bn to $5.1bn. This rebalancing will help reduce external vulnerabilities while maintaining a stable domestic financing base.”