State Minister for Finance Michael Halkitis said it took significant number crunching and strategising for the Progressive Liberal Party (PLP) Government to craft the proposed 2012/2013 Budget after having to cope with the “financial mess” left by the former Free National Movement (FNM).
Mr. Halkitis led off day one of debate on the 2012/2013 Budget in the House of Assembly Wednesday and reminded Bahamians that the newly elected Christie administration has inherited a serious financial crisis from the former government.
He said the country’s current balance sheet played a major part in shaping the proposed fiscal plan, especially since the PLP formed the new government with mere weeks to spare before having to craft the new fiscal agenda.
“Our strategy calls for us to manage our resources better and to foster growth in the economy,” he said. “The budget did place particular emphasis on the dire fiscal situation that the government has been handed by the previous FNM administration.”
“The previous government had forecast a GFS deficit of three per cent of GDP (Gross Domestic Product) for the fiscal year that is about to close. However, whether through lack of oversight, a simple lack of discipline, slackness, or a selfish desire to cling to power at almost any cost, it allowed the deficit to balloon to 6.3 per cent of GDP.”
Mr. Halkitis outlined in depth, the financial constraints his government now faces, adding that the FNM’s “spending spree” did more harm than good at the height of the recession.
The Golden Isles MP outlined that the multimillion dollar New Providence Road Improvement Project (NPRIP) and the many loans only made things worse in an already struggling economy.
He said the PLP now has to tackle stabilising the economy and restoring public finances.
“A mere 12 months ago, the FNM stated that the deficit would amount to $248 million,” he added. “The deficit is now looking to come in at $504 million, more than double the amount that they themselves had projected. These are facts.”
The state minister added that there is clearly a need to accelerate the pace of reform and this would require clear support from the policy level, which would be provided.
Mr. Halkitis said now is the time for a critical debt management programme to be put in place and blamed the FNM for being wrong on the core components of the fiscal framework of its government and over predicting and underestimating both capital and recurrent expenditure for consecutive years by millions of dollars.
“We will be judged over these next five years,” Mr. Halkitis said. “The Bahamian people will, at the end of this term, look at our performance and we will have to show then what we have done. But first we must show them where we started and what we were left to deal with.
“So when we go back to them during another election cycle we have to show them where we started and where we ended up.”
Due to the alleged FNM mismanagement of government funds, the state minister said unemployment shot up and the PLP now finds itself paying more for debt than education and national security.
But, despite bad the economic picture, Mr. Halkitis said nothing will stop the PLP from living up to its campaign promises.
“Despite the immediate fiscal predicament in which the previous administration has left us, we are resolved to restore the nation’s public finances, in the shortest possible time, thereby positioning ourselves to implement the full complement of our Charter commitments in a fiscally responsible and sustainable manner,” he said.