BAHAMAS CAN’T AFFORD FOR FISCAL FORECAST MISS

FROM PAGE B2 when everyone pays taxes due”, among other things, he was effectively laying out and rationalising what the potential cost of getting it wrong may look like. He said: “We don’t want to raise tax rates... We always have a choice from a broad range of options, but by far the most palatable option we have is improving our compliance”. At face value, a clear and unequivocal statement, and on analysis one that goes fundamentally to the root of a very complex set of circumstances facing policymakers. Get 2022-2023 wrong and the shifts could be potentially seismic.

The expected outturn for the current fiscal year is presented with greater precision than is evident in the current Budget. The Prime Minister, in declaring the revenue performance, said: “I am confident the revenue outturn at the end of the fiscal year 2022-2023 will near $2.9bn”. With respect to expenditure, the statement was even less precise “...Expenditure at the end of fiscal year 2022-2023 will almost reach the target of $3.1bn set in the supplementary Budget.”

Having followed and analysed budgets for over a decade, my preference would be to have seen the normal approach, which sends a clear signal that there is a narrow room for differences. In analysing, it must be assumed that they did their homework well and therefore the numbers are likely to be as stated.

Beyond the numbers Hawksbill Creek Agreement - The Budget presentation has drawn attention to a very important issue - that being general concern for the performance of the Hawksbill Creek arrangement in Freeport. The Prime Minister was unequivocal that there is dissatisfaction with how that is currently working. Subsequent commentary suggests that the matter could be differently argued. It remains, though, maybe one of the most significant pronouncements which, though important, is unlikely to have any near term impact on the fortunes of the country.

The importance of this arrangement must be acknowledged, and the extent to which it fails to meet objectives must be addressed in the interests of The Bahamas, based on full factual analysis and expert participation. Respecting the complexity of the issues, commentary on this is better left to subsequent developments and the intervention of more knowledgeable and closely associated parties. Government Financing –The numbers augur well for the financing needs of the Government, which is projected to decline over the next four years. With the cost of debt averaging 5.5 percent, and a growth rate of well upwards of 4 percent, needed to achieve the $16bn economy by 2027, the country is operating in interesting circumstances. What is most critical, though, from the Budget communication is the means by which the Government will seek to access lower cost funding. As was done recently, it intends to leverage institutions such as the Inter-American Development Bank but they are in the pipeline. I can only go by what the GBPA has said, and they have not just begun saying these things but they have been saying these things for quite some time.” nation, especially our cherished Family Islands.

Fred Mitchell, the Progressive Liberal Party's (PLP) chairman, and minister for foreign affairs and the public service, has repeatedly countered in his daily voice notes to party supporters that it is the Government - and not the GBPA - which is responsible for bringing the $1.5bn worth of investments to Grand Bahama. These include the Carnival cruise port, redevelopment of Freeport Harbour and proposed $350m Grand Bahama Shipyard investment.

“We are committed to enforcing our social protection safety nets and ensuring that all Bahamians have access to basic goods and services. We believe in a thriving business environment where profitability and affordability co-exists. Our ongoing dialogue with retailers aims to create a balance that fosters business growth while preserving consumer affordability.”

Mr Davis said reforms to the Consumer Protection Act, already tabled in the House of Assembly for their first reading, will give consumers more rights, while deceptive business practices will be dealt with assiduously. He added: “We are enhancing the Consumer Protection Act.

Mr Carey added: “This is the first time the Government is denying the GBPA’s claims, and instead saying they are responsible for bringing in the $1.5bn in investments.” Included in this figure is the $250m Weller Group Six Senses project. “I know they particularly mentioned a solar farm, and they have mentioned Xquisite Yachts, which is certainly in progress, so the GBPA has mentioned certain things over the recent past," Mr Carey added.

“It’s interesting that the GBPA has consistently talked about these investments, and this is the first time the Government has taken issue with it saying that they did these things.”

Amendments are coming and they are about giving the consumers a louder voice and stronger rights.

"For example, Bahamians living abroad can now lodge a complaint. The Consumer Commission will be empowered to alert you to harmful practices. Businesses will be required to be licensed and registered, and deceptive conduct, harassment and coercive selling practices will be addressed more comprehensively.

“These, and further steps, are taken to ensure a more organised framework, clearer definitions and stronger protection for consumers. We are championing the importance of customer service because we believe it can stimulate economic growth and

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(IDB) to secure credit risk enhancement.

Therefore, while the numbers are indicative of a march in the right direction, it is clear that The Bahamas is still not out of the woods from a credit perspective. With still seemingly limited options in the domestic market, it is important to pay attention to this policy position and be clearly informed by the realities given the recent struggle to seamlessly secure funding for known borrowing needs. Next year’s projected Budget performance could represent a watershed moment, and an important turning point for the country’s debt management. This desired outcome must be viewed against the fact that 20 percent of total expenditure goes towards payment of interest on debt. The ability of the country to reduce the cost of borrowing holds serious implications for social and infrastructure advancement. When a fifth of all spending is on debt, domestic or external, and with slippage in performance that amount would grow, everyone committed to the success of the country must have a desire for a fundamental turnaround. In this regard the numbers must hold and projections be achieved. In Part II, I will take a look at some of the major policy statements emerging from the Budget and suggest what might have been missing from the presentation.

• NB: Hubert Edwards is the principal of Next Level Solutions (NLS), a management consultancy firm. He is currently a student at the Eugene Dupuch Law School. He can be reached at info@nlsolustionsbahamas.com. Hubert specialises in governance, risk and compliance (GRC), accounting and finance. NLS provides services in the areas of enterprise risk management, internal audit and policy and procedures development, regulatory consulting, anti-money laundering, accounting and strategic planning. He also chairs the Organisation for Responsible Governance’s (ORG) economic development committee. This and other articles are available at www.nlsolutionsbahamas.com