NASSAU, BAHAMAS – Prime Minister Philip Davis, during his mid-year budget communication, slammed the opposition’s deficit claims as misleading and further clarified that the $300 million borrowing authorization is a precautionary measure for the National Investment Fund, not for covering the deficit or current government projects.
“I would like to address a point raised in the opposition’s response regarding the deficit number,” Prime Minister Davis stated in Parliament. “They claimed a deficit figure of nearly $500 million, combining both the current deficit and arrears. However, this statement is misleading. Adding the deficit figure with the arrears figure is not an accurate representation, especially considering that the Government’s arrears reported in the Mid-Year Communication where total arrears as of December 31st, 2024, and would largely be settled within this fiscal period.”
Davis emphasized that since this administration took office, the Government has not exceeded its budget. “The suggestion that we will do so this fiscal year is without evidence. We fully intend to meet our deficit target for this fiscal year,” he added.
The Prime Minister also addressed the recent discussions surrounding the borrowing resolution tabled in Parliament last week, which authorizes borrowing up to $300 million. “It is essential that we all have a clear understanding of what this resolution means and how it aligns with our national goals,” said Davis.
“This borrowing authorization is a precautionary measure, designed to provide us with the flexibility to borrow if market conditions are favorable. It does not mean we will borrow the full $300 million. The authorization is for up to $300 million, not a commitment to borrow the full amount. This gives us the ability to act in the best interest of the country, borrowing only when it is prudent and when the timing is right, under normal market conditions. These funds will not be used to finance the Government’s deficit operations, nor will they be used to fund any current government projects.”
Davis noted that the funds will be placed into the National Investment Fund. He explained that the purpose of the National Investment Fund is to acquire valuable assets that will help build a prosperous future for all Bahamians. “We cannot build a Fund for national development and then fail to resource it properly. The Fund was established with a clear purpose: to acquire assets that contribute to the long-term growth and well-being of our nation. Passing the National Investment Fund Act was an important step in our commitment to securing assets that will benefit all Bahamians for generations to come. To ensure the Fund is able to serve its purpose, we must provide it with the resources it needs.”
He continued: “What is the point of passing a significant piece of legislation like the National Investment Fund Act if we are not going to equip it with the necessary funds to succeed? This resolution, and the borrowing it authorizes, is a step toward ensuring that the National Investment Fund is properly capitalized, with resources to acquire assets that will serve the best interests of the Bahamian people.”
Additionally, Davis noted that starting April 1st, the Value Added Tax (VAT) on unprepared foods will be reduced from 10 percent to 5 percent, whether the items are sold by grocery stores, convenience stores, or imported directly.
“Unlike in the past, when merchants had to apply for VAT refunds on breadbasket items after importing them, this time, we have made a critical change. The VAT rate reduction will now be applied directly at the border. What this means is that every Bahamian, whether a business owner or an individual importing unprepared food items for their families, will pay a lower rate upfront. This measure will result in more affordable prices on the shelves and greater access to essential goods for all Bahamians.”
