The Tribune

By NEIL HARTNELL

TRIBUNE Business Editor

nhartnell@tribunemedia.net

THE OPPOSITION yesterday challenged if the $311m spent from the National Investment Fund represents “off-the-books capital expenditure” structured so as not to blow the Government’s Budget surplus in the election run-up as a Cabinet minister asserted it had followed the law.

Michael Pintard, the Free National Movement (FNM) leader, told Tribune Business it was clear the Davis administration had used the Fund, the equivalent of a Bahamian sovereign wealth fund, as “a side account” that allowed it to spend the public’s money seemingly without any oversight “in an election year”.

And he was backed by Dr Duane Sands, the Opposition’s chairman, who asserted that Michael Halkitis, minister of finance, in the Government’s long-awaited response to concerns over its management of the Fund, had made “a striking admission” that its monies had been used for what are typical capital expenditures “that largely could only come from the Consolidated Fund” that deals with most public revenues and spending.

However, Mr Halkitis, speaking to Tribune and other reporters, rejected Opposition charges and concerns from others by reiterating the Government had stayed within “the exercise of the law” in relation to the Fund and how its monies and other assets have been managed over the past year-and-a-half.

While acknowledging the governance deficiencies, the minister signalled that the Government had acted in accordance with legal advice from the Attorney General’s Office that - until the National Investment Funds Act 2022 becomes fully activated - the Fund is governed by the Public Finance Management Act, and thus comes under the oversight and control of the Ministry of Finance and Public Treasury.

Mr Halkitis said the Government is now working to make the Fund fully operational by completing “all the administrative procedures”, including the regulations governing its workings and appointment of an investment committee, “definitely before the end of the year” as he pledged: “We are going to put this behind us.”

Speaking earlier in the House of Assembly, he disclosed that $310.9m has been taken from the Fund to-date for investment in infrastructure projects, improving public services and upgrading court facilities throughout The Bahamas. Asserting that this outlay will only benefit the Bahamian people, Mr Halkitis said two-thirds of this sum - $210.6m - has been invested in road and building improvements, plus water system upgrades.

The remaining $100.3m, he added, was allocated to airport development projects including in Cat Island, San Salvador, Exuma and Long Island. The Opposition yesterday said this explanation contradicted that by Senator Latrae Rahming, the Prime Minister’s communications director, who told this newspaper that “the primary use of the National Investment Fund was to support the Government’s airport infrastructure programme”.

The date provided by Mr Halkitis thus represents a reversal of this position. However, the National Investment Funds (NIF) Act 2022 itself appears to contradict Opposition charges that the law does not permit investments of the nature outlined by Mr Halkitis as it seemingly allows for “the development of national infrastructure and public improvement projects” - not just those that deliver investment returns.

But, while few could argue that the projects financed to-date will not benefit the Bahamian people, both Mr Pintard and Dr Sands argued that Mr Halkitis’ statement has raised more questions than it answered. The Opposition leader, echoing comments by Gowon Bowe, Fidelity Bank (Bahamas) chief executive, renewed calls for a “full accounting” and auditing of the Fund’s spending given the absence of a project-by-project breakdown.

He added that the Public Accounts Committee (PAC), Parliament’s spending watchdog, plans to invite Barbara Zonicle, the treasurer, to appear before it next Tuesday in relation to the Fund controversy - likely in a bid to discover if any of the $311m spending went to, and was approved by, the Public Treasury as is normal. Mr Pintard said it was also possible the Opposition may launch legal action this week once it receives its requested legal opinion.

“Absolutely,” he replied, when asked if the situation calls for an independent audit of the Fund. “That is why we are seeking the legal advice from the attorney. The Government has to be compelled to share details on how all the funds were used, and whether they are compliant with all the laws…. There has to be a full accounting.”

Concerns over the Fund intensified earlier this week after John Rolle, the Central Bank governor, confirmed that - despite receiving his instruments of appointment as one of its directors - the Board had never been properly convened or met. This triggered fresh controversy given that the Board plays the key role in the Fund’s governance, oversight and investment management strategy and decisions.

The NIF Act stipulates that it is the Board’s responsibility alone to “open and maintain” the Fund’s bank and investment accounts, as well as enter into agreements with financial institutions to act as custodian of its assets. Given that the Board has never been convened, the Opposition and others are questioning how a bank account could have been opened in the Fund’s name and monies transferred/invested from it.

Mr Halkitis yesterday confirmed that the net $265.5m proceeds remaining from the Government’s $1.067bn foreign currency international bond issue, which took place in the 2025 first half, were deposited into an account at the Central Bank in the name of “the National Investment Fund”.

“The funds went to an account at the Central Bank in the name of the National Investment Fund,” he told a Tribune reporter. “The funds came out of the account at the Central Bank to find the various projects I mentioned in my statement.” However, given that the NIF Act states only the Board can open such an account, and it has not been convened, the Opposition is arguing that this facility was under the Fund’s control in name only.

Asked whether Opposition believes the Government has been using this account for so-called “off-the-books capital expenditure”, Mr Pintard replied: “It’s exactly that. They used a side account, which they have visibility of and access to, and used it to move money outside the NIF Act for purposes none of us knew about, and did it in an election year.”

The FNM publicly, and other observers privately, have voiced concern that the Government has used the Fund’s Central Bank account as, in effect, a second ‘Consolidated Fund’. By treating its spending as investments, and the borrowing proceeds injected into the Fund as “equity”, they argue that the Government has been able to keep the $311m from impacting its deficit and blowing the revised $32m Budget surplus projection for 2025-2026.

This would also enable the Government to avoid missing the 2025-2026 surplus target by more than 0.5 percent of GDP, which would force the Davis administration to submit a corrective action plan to Parliament. However, it could also disguise debt liabilities that Bahamian taxpayers may be required to repay in future years.

Total public and taxpayer money placed into the Fund could be higher than $900m. Mr Halkitis, in the 2026-2027 Budget communication, said the Government had transferred net or “excess borrowing receipts” worth $700m to the Fund during the 2025-2026 fiscal year. He signalled it has retained these proceeds as cash, and not used them to cover its bills and expenses, which would prevent them from impacting the deficit/surplus position.

This might explain how The Bahamas’ national debt increased by $1bn during the 2025-2026 Budget period but did not appear to show up in the deficit, which was just $121.2m for the ten months to end-April 2026. However, besides the $700m, the Davis administration had also previously placed the $265.5m net proceeds from the $1.067bn bond into the Fund during the prior fiscal period.

Tribune Business revelations that most of that $265.5m had been removed from the Fund, leaving just a balance of $200,000 at end-March 2026, sparked the increased scrutiny that ultimately led to Mr Rolle’s disclosures about the Board not being convened, and the governance and operational consequences of this.

Dr Sands yesterday called for clarification on the numbers, given that the $311m figure now cited by Mr Halkitis does not align with the $700m mentioned in the Budget communication or the $265m initially injected into it. And, noticing that the minister said Fund Board members were appointed on June 30, 2025, he suggested that this was made retroactive given that the Central Bank governor only received notice of his appointment in August last year.

The Opposition chairman also questioned why there was a gap of two-and-a-half to three years between the NIF Act’s passing in 2022, its gazzetting and enactment in December that year, and the move to finally appoint the Board. The latter action occurred with less than one year to the May 12, 2026, general election.

“We can only speculate as to why there was this hiatus between the passage of the Act, the date of enactment in December 2022, and what breatherd life into it, but it was probably not coincidental there was an expectation of an upcoming election and need to spend some money,” Dr Sands said. “What was it about these roads, these courts, that was so important that they had to come through this avenue?”

Mr Halkitis, though, in his House of Assembly statement pledged that he and the Government will fully co-operate with any probe by Mr Pintard and the Public Accounts Committee, which is the only parliamentary body the Opposition controls.

Acknowledging the differences over the Fund, told a Tribune reporter: “In our view we were authorised by the resolution of Parliament on March 10, 2025, which allowed us to raise some money and, if you read the resolution, it said specifically for infrastructure and development,” Mr Halkitis said. “And so, it means that we were within the law, the exercise of the law. They have a different opinion.”

Mr Pintard and the Opposition have charged, though, that the resolution referred to by Mr Halkitis only gave the Government permission to borrow to raise monies for the Fund. They argue it does not give authority to place the $265m in the Fund, as all borrowings have to be deposited in the Consolidated Fund according to the constitution, nor spend it unless there is a parliamentary appropriation.

However, Mr Halkitis yesterday said the Attorney General’s Office and government advisers are now working to finalise the Fund’s regulations and bodies such as its investment committee. “We recognise that there are some administrative things that need to be completed and we are going to complete them,” he added, “so we look forward to answering all the questions so the public have all the benefits of it.

“We did say in the statement that, in the absence of completion of all the administrative procedures, the Ministry of Finance within its powers under the Public Finance Management Act was acting.” Asked when the process of operationalising the Fund will be completed, Mr Halkitis replied: “We are looking to do it as soon as possible; definitely before the end of the year.

“I don’t want to give you an exact time, but we are meeting now and working quickly. We are going to put this behind us.”