BCCEC commends govt.’s increased reporting and fiscal prudence
NASSAU, BAHAMAS – Bahamas Chamber of Commerce and Employers’ Confederation (BCCEC) Chief Executive Officer Jeffrey Beckles contended yesterday that the government will have to be “very creative” in managing expenditure of the next four to five months if it is to close out this fiscal year on target.
“Obviously, I’ll tell you they’re going to have to be very creative; literally, very, very creative in how they manage these next, four, five months because as you know, as we get into the fiscal cycle of budgeting; once you get to April, May, things start to slow down,” Beckles said.
“So, the government is going to be very, very cautious in how it manages its overall operations over these next three, four months in order to keep that deficit target in line.”
According to the government’s budgetary performance report for the first six months of 2018/2019, it has collected $1.01 billion, 38 per cent of its projected revenue ($2.64 billion) collections for the fiscal year.
Expenditure increased by nearly $50 million period-over-period, from $1.13 billion to $1.18 billion, and recurrent expenditure increase by $93 million — from just over $1 billion to $1.09 billion.
While the GFS deficit retracted by nearly $80 million period-over-period — from $253.9 million to $174.2 million — the current deficit is nearly three quarters (73.3 per cent) of the projected deficit for the fiscal year.
As it relates to the government’s ability to meet its revenue projections, Beckles pointed out that in the second half of the fiscal year, revenue collections typically increase.
“Taxes tend to flow in a little bit more, so it allows the government performance to look generally good; not to say that they are not doing a good job,” he said.
“Revenues typically improve and increase.
“That being said, if the government is still going to be challenged to manage its spending in light of its commitments on improving expenditure and the rationale for expenditure.”
The performance report released last month showed that the government’s revenue for the first half of 2018/2019 increased from $129.5 million, largely as result on increased value-added tax (VAT) and stamp tax collection.
The Minnis administration increased VAT from 7.5 per cent to 12 per cent in July 2018, three years after the tax was introduced.
In the first six months of this fiscal year, the government collected $399 million, up from the $319 million collected in the first six months of the previous fiscal year.
It also collected more than double in stamp tax, from $54 million in the first half of 2017/2018 to $114 million in the first half of 2018/2019.
The government also collected an additional $10 million as a result of immigration fee hikes last year.
When asked whether the government’s fiscal performance at the half-way point of this fiscal year should have been better based on the increased tax collections, Beckles said while it is reasonable to expect any increase in taxes to be reflected in revenue collections, the public should also expect the government to follow through on its mandate to collect outstanding revenue.
The chamber president also said there is an expectation for the government to reach out to the private sector for advice about the financial position and realities of the nation.
He said the private sector also expects the government to be diligent in “chasing after its revenue.
“We often forget, but there is a lot of money owed to the government,” Beckles said.
He continued, “The government needs to be encouraged and is encouraged to continue its aggressive efforts to try and collect the monies owing to it,” Beckles said.
“If government is going to impact any of those three areas that we just talked about (revenue collection, reducing the deficit and curbing expenditure) there are two keys. It has to collect its revenue period, and it has to be relentless in doing so. And then secondly it has to definitely be very, very prudent in how it spends.”
Beckles said the government ought to be credited for releasing fiscal targets, and quarterly performance reports.
“If anything, we are to continue to give government support and credit for having done that,” he said.
“At least we understand where they are attempting to get; and where they are in terms of achieving those objectives.
“I think they are setting the right tone in terms of expectations.
“They are attempting to be more fiscally prudent and also more open and transparent in how they communicate and when they communicate.
“I think that’s also a positive. One of the challenges we’ve always had is we get information very late.
“We either get it late or sporadic or a combination of the two to where you can’t really make out where we are.”