The government is set to bring about Fiscal Responsibility Legislation specifically targeting the rising deficit accumulated over the years. That, according to Prime Minister Dr. the Hon. Hubert Minnis during his Contribution to the 2018/19 Budget Debate in the House of Assembly, June 18, 2018. He reaffirmed that his government is “steadfastly committed” to balancing the budget and getting the burden of debt down to a maximum of 50 percent of Gross Domestic Product. Hence the draft legislation, which is being circulated for public input, includes target levels for the deficit that will see it eliminated in three years – 2020/21. The Prime Minister noted that the previous administration left almost $800 million in outstanding bills and obligations. After having paid millions of dollars of unpaid bills at the end of 2016/17, his government, in preparing the 2018/19 Budget still faces “a huge pile” of additional unpaid bills and arrears to the tune of $360 million. “In their last two years in office, they increased the government debt by a staggering $912 million. And this, despite the $1.5 billion in revenues that were collected from the VAT during the first two and one-half years of its existence,” he said.
According to the Prime Minister, the increase in V.A.T from 7.5 percent to 12 percent is a direct consequence of the “reckless, irresponsible, corrupt mismanagement of public finances of the Christie/Davis government.” “These are tough targets indeed and the timeline for their achievement is challenging,” the Prime Minister said. “But after so many decades of deficit financing and rising debt levels, we firmly believe that the time has come for decisive action.” He said that his government believes this move would bolster confidence and stimulate enhanced domestic and foreign investment into the economy. “We fully intend to proudly wear the mantle as the Bahamian Government that finally succeeded in wrestling the deficit to the ground, bringing us to a much healthier fiscal position.” The Prime Minister further explained that in order to restore the country’s financial health, his government is taking a strategic and balanced approach in its budget and financial management.
Such measures include:
· Cutting expenditure, finding savings and reducing waste and costs in a number of areas;
· Aggressively targeting corruption and the misuse of public funds, which is a tremendous burden on public finances;
· Major investments in education and training, and the development of entrepreneurs;
· Major investments in critical infrastructure;
· Improving the ease of doing business in order to stimulate growth and productivity;
· Increased revenue generation through more domestic investment and foreign direct investment; and,
· Increased revenue generation by a higher VAT rate, and a sliding scale tax for gaming operators, among other tax measures.
Other measures include ongoing reform of taxes including ongoing decreases in or the elimination of various tariffs and duties, major investments in BPL and renewable energy in order to decrease the cost of electricity long term, and an improved fiscal and budgetary management through legislation, and technology. The Prime Minister said that his government is “doing the right thing” to stop The Bahamas from heading down a path that could ruin the country for future generations. “Right here in our region, we are witnessing the painful results of governments waiting too long to make the difficult though necessary choices to keep their countries from financial collapse. “I am determined to make sure that our Bahamas does not get to the point where a future prime minister must make an emergency call in the middle of the night, to an emergency international lending agency to request a bailout.”