The government plans to borrow less than $100 million, it was announced yesterday.
State Minister for Finance Michael Halkitis announced tabled a resolution for the Government of The Bahamas to borrow just over $99 million for expenditure.
This, he said is significantly down from the $543 million needed when the Christie administration first took office in 2012.
While presenting the fiscal road map for 2016/2017 during his budget communication in the House of Assembly yesterday, Prime Minister Perry Christie said that the government is looking to reform recurrent and capital expenditure, enhance recurrent revenue and greatly reduce its borrowing.
He said recurrent revenue has grown significantly largely due to the implementation of Value Added Tax in January 2015 along with customs, real property tax and business licenses.
“The further development of the new Central Revenue Administration will also contribute importantly to revenue compliance and enhanced collections going forward. The improved revenue yield of our tax system that we have achieved during this mandate has brought it into the range of such yields among countries in the region, but I would stress that it still remains at the lower end of that range,” Prime Minister Christie said.
In terms of recurrent expenditure, the nation’s chief said the government is working towards further decline.
For 2016/2017 fiscal year, the government’s recurrent expenditure is estimated at $2, 321 million, an increase of $166 million from its projected level this year.
“The bulk of that increase corresponds to a higher level of debt redemption payment, by some $102 million as compared to its level in 2015/2016. However, I will stress again that the higher level of debt redemption will have no bearing on the GFS deficit in 2016/2017,” Prime Minister Christie said.
“Going forward and in line with the commitments contained in our medium Term Fiscal Consolidation Plan, we are asserting that recurrent expenditure will be further constrained and projecting that it will decline as a percentage of GDP beyond the coming fiscal year, by one percentage point or more per year.”
Mr. Christie said retraining capital expenditure over the medium term to a level in the range 2.5 percent of GDP reflecting expenditure of $242 million per year.
“This constraint does not reflect a lack of commitment to modernizing and upgrading the public infrastructure in The Bahamas. In this regard, as I mentioned earlier, we have provided significant new investments for National Security with funding to provide the RBDF with three modern bases of operations throughout the archipelago. In addition, we have included funding for the road paving programme in New Providence,” he said.
The prime minister said the government also plans to improve airports throughout the country including Exuma, North Eleuthera, Berry Islands and Cat Islands among others.
In addition, the government has acquired new accommodations for the Post Office.
According to the prime minister, the GFS deficit will post a further decline in 2016/2017 to the tune of $100 million or 1.1 per cent of GDP.
He also predicts a second consecutive surplus in 2016/2017 to the tune of $172 million.
“On the current fiscal track, the GFS Deficit will be eliminated in 2018/2019 and a small surplus will be posted. The ongoing rise of the Government debt burden will be arrested and the ratio of debt to GDP will decline to 64.1 per cent in 2016/2017, down from the peak of 64.6 percent in 2015/2016. It will fall steadily, thereafter to stand in the area of 59 percent of 2018/2019,” he said.
