The Tribune

By NEIL HARTNELL

TRIBUNE Business Editor

nhartnell@tribunemedia.net

THE GOVERNMENT is “giving rise to suspicions that something is being hidden” by its failure to be transparent and disclose changes to fiscal forecasts for two successive Budget years in a timely manner, a senior banker warned yesterday.

Gowon Bowe, Fidelity Bank (Bahamas) chief executive and a member of the former Fiscal Responsibility Council, told Tribune Business the Government “is falling victim” to the outdated “trust me, I’ve got this” strategy and messaging employed by previous administrations rather than fully revealing critical developments - good or bad - and explaining what they mean for Bahamians.

Speaking out after it emerged that the Davis administration quietly changed the fiscal forecasts for both the closed 2025-2026 fiscal year, as well as the current 2026-2027 Budget period, at the last minute with no official announcement, he argued that this will only result in a “loss of trust” in the Government’s fiscal management by Bahamians as well as create “greater scrutiny” and scepticism moving forward.

Urging the Government to break with past communications strategies, Mr Bowe told this newspaper that this “threatens to overshadow” positive developments such as the narrowing of the annual fiscal deficit compared to COVID levels.

He added that the number of Bahamians simply seeking “credible” announcements has likely reached its highest level ever, and the electorate will have “far greater respect” for administrations that release bad news with the “same objectivity” as positive developments.

“I think the Government is falling victim to the legacy position of telling the constituent base ‘just trust me, I have this’,” Mr Bowe said of the fiscal revision fall-out, “as opposed to appreciating the days and times they are in, and that the number of people simply looking for credible communication is probably at its highest level.

“We have a number of positive developments that are taking place that are starting to become overshadowed by less than transparent decisions which are giving rise to suspicions something is being hidden. The Government needs to have an approach where it will be open with the public but, equally, not just have the information available but documents setting out what is critical to understand the fiscal situation of the country.

“There’s a fear of less than optimistic news, but people will have far greater confidence and respect that bad news is delivered with the same objectivity as positive news,” Mr Bowe said. “I think that posture needs to be done away with. The same way there’s an expectation of material changes being reported under the fiscal legislation, that same principle should be adopted in all communications.

“We are advanced sufficiently as a society to say that, when there are significant developments, positive or negative, these are highlighted and explained. These revisions to the fiscal forecasts, there’s no understanding of why they have been done - whether a previous estimate was found to be inaccurate or wrong; whether circumstances have changed; and whether there is a new development that requires an amendment.”

The Davis administration, via revisions unveiled after the House of Assembly had completed its May Budget debate, lowered the size of the predicted surplus for the recently-closed 2025-2026 fiscal year by some $42.8m in a signal that it is likely to miss the original $75.5m target. The move trimmed the forecast surplus, which measures by how much tax and other revenue income exceeds public spending, to some $32.7m.

The narrowed surplus, which would still be a positive achievement if attained, is forecast to result from $239.2m in additional total government spending not factored into the original 2025-2026 Budget. The extra $185.6m in recurrent or fixed-cost expenditure, plus a further $53.6m in unanticipated capital spending, is projected to exceed the extra $196.5m in revenues which will take the Government’s annual income beyond the $4bn mark and beat its original tax target.

However, while the 2025-2026 changes were disclosed, this occurred after the Budget debate had ended thus giving the Opposition little time to assess and challenge them. No explanation for the revisions was provided, and the alterations were not brought to the Bahamian people’s attention, although a 2025-2026 supplementary Budget was posted on the Government’s fiscal website absent any announcement on its release.

Mr Bowe, acknowledging that the Government’s projections for the public finances are not set in stone, said these may have to be constantly updated and revised as required by external events such as the fall-out from the Middle East conflict and rising oil prices. However, the failure to make timely and transparent disclosures over such adjustments threatens to needlessly undermine the Government’s fiscal credibility.

“Forecasts are just that. They are not crystal balls,” the Fidelity chief added. “Those are going to be changing from time to time, but those changes need to come with understanding - whether it’s a change in methodology, and what you are doing to fix is; whether it’s a change in circumstance with unforeseen developments taking place and, positively or negatively, impacting original forecasts.

“We are still suffering from that apprehension of delivering negative news, and that only creates greater panic, loss of trust and greater scrutiny going forward as opposed to up-front messaging that answers those questions in the first place. There needs to be a plan of action to address it as opposed to burying it.”

The 2025-2026 revisions were compounded by the Government’s move to also adjust projections for the current 2026-2027 fiscal year just one month after the initial forecasts were first revealed by Michael Halkitis, minister of finance, in the aftermath of his end-May Budget presentation.

Research by Tribune Business shows that the Davis administration has increased the Budget surplus projected for the present fiscal year by 30.6 percent, or $68.3m, to $291.4m as compared to the initial $223.1m. This positive outcome is forecast to be achieved despite a less optimistic revenue outturn, with the Government’s total income falling by $103.1m from the initial $4.357bn outturn to $4.254bn, due to a greater drop in public spending.

Recurrent expenditure is now forecast to fall below 2025-2026 levels, hitting $3.58bn as opposed to the now-prior year’s $3.63bn, and representing a $144m reduction from the $3.724bn first predicted for 2026-2027. Capital spending, which is typically dedicated to the Government’s public infrastructure projects, is now pegged at $382.9m - a figure below both the prior year’s revised $420.8m and the $410m originally eyed for 2026-2027.

This newspaper understands that, while the 2025-2026 changes were belatedly disclosed near the end of House of Assembly Budget proceedings, those for the 2026-2027 period were not revealed at all.

The full extent of the Government’s budgetary adjustments have only been exposed by the Fiscal Responsibility Council, the independent watchdog, via its just-published report on the 2026-2027 Budget in which it calls on the Davis administration to both publicly explain the reasons for the alterations and how these will impact achievement of its fiscal consolidation objectives.

Criticising the manner in which the 2025-2026 fiscal forecasts were altered, the Council said: “The 2025-2026 supplementary Budget draft estimates of revenue and expenditure was published by the Government at the conclusion of fiscal year 2025-2026 with no accompanying notes or explanations as to what necessitated the extraordinary budget for 2025-2026 and implications that it poses in respect of the Government’s attainment of the established fiscal objectives.

“The supplementary Budget also revised the draft estimates of revenue and expenditure for 2026-2027 contained in the Budget tabled in the House of Assembly on May 27, 2026, without notes or explanations as to the rationale for the revisions, one month after the commencement of the Budget debate.

“While the Fiscal Responsibility Council acknowledges that budgets are presented as draft estimates, the Fiscal Responsibility Council recommends that the revisions be accompanied by details of the rationale for such revisions and the implications for performance vis-à-vis the fiscal objectives.”