Deputy Prime Minister and Minister of Finance, the Hon. K. Peter Turnquest said to properly understand the Government’s fiscal consolidation strategy and the state of the public finances at the mid-point of the 2017/18 fiscal year, it is necessary, to begin with, a realistic and thorough assessment of the gravity of the fiscal challenges that this Government Administration inherited from the previous administration. “Irrespective of the baseless and empty rhetoric that we have heard following the presentation of the Mid-Year Statement, our Government does have a very clear guiding vision for a better future for Bahamians, with both a stronger economy and enhanced job opportunities. We also have a plan for getting there,” the DPM said during his Contribution to the 2017/18 Mid-Year Budget Debate in the House of Assembly, Wednesday, March 7, 2018.
He said the present administration elaborated on their vision and plan in its 2017 Manifesto, in the Speech from the Throne, as well as in the May Budget Communication. “As I made amply clear in the Budget Communication, however, we must as a priority addresses the fiscal mess that we inherited from the party opposite. We simply cannot, and will not, spend recklessly as did the previous administration without due regard for the financial resources available. “Ours is now the task of putting order in the public finances of our nation to arrest the seemingly inexorable rise in the burden of Government debt that hangs like the proverbial albatross around the neck of Bahamian society and our economy.” The DPM said it is imperative that the burden of debt is returned to lower and more sustainable levels in order to free up the critical resources that are necessary to fully implement the action plans within the Government’s socio-economic growth agenda as promptly and effectively as possible.
He explained that when the burden of Government Debt represented a more manageable and sustainable 30 percent of GDP, the Government’s interest payments on the debt accounted for some 10 cents of every revenue dollar. “Last fiscal year, with a debt burden of 57.6 percent of GDP, interest payments chewed up almost 14.5 cents of every revenue dollar. “Were it possible to return to a burden of debt under which interest payments again accounted for 10 percent of revenues, our annual interest payments would be appreciably reduced. “At the 2017/18 level of revenues, the savings would be on the order of $75 million. Those are precious financial resources indeed that could make a significant contribution to the advancement of the Government’s agenda for growth through, for example, supplementary investments in education, health or infrastructure.”
He said it needs to be stressed that much work needs to be done to get the country to the type of debt burden objective that would be preferable. However, the Government is firmly committed, through its concrete fiscal consolidation plan, to get the country moving in that direction. DPM Turnqest said as a first step requires the elimination of the annual Government deficit that is the direct cause of increased borrowing. He said, “Eliminating the deficit and getting to a lower debt burden is also vital to recreating the fiscal room to maneuver that is prudently required to allow the country to deal with unforeseen economic and other shocks, such as hurricanes, that may present themselves in the period ahead.”