NASSAU, BAHAMAS – As credit ratings agency Moody’s encourages the Minnis administration to exercise restraint in public spending while predicting it will miss its deficit target, the private sector said yesterday it expects the government to make some “very tough decisions” in its commitment to meet its 2018/2019 targets.
“There is still a degree of cautious optimism that we all share,” said Bahamas Chamber of Commerce and Employers’ Confederation (BCCEC) Chief Executive Officer Jeffrey Beckles in response to Moody’s upgrading The Bahamas’ outlook from negative to stable.
“It doesn’t mean by any stretch that the government is out of the woods.
“It simply means that the government must continue its collective effort to stay on its course, albeit some may project that the government may not attain its fiscal target, but it doesn’t mean government shouldn’t be committed to staying on track to try and meet it.
In a follow-up statement last week, Moody’s said the deficit goal was attainable, but further spending curbs would be required to meet the goal.
“Obviously, there are some very tough decisions to be made and I believe that this administration is very much committed to looking at the implications of making those decisions, but nonetheless they have to be made,” Beckles said.
“If we are going to continue to enjoy the benefit of having these positive statements made by Moodys and the like, there are things that we must be committed to go and do that.
“Now, it took us a while to get here. It is going to take us a while to get out of it.
“It took very concerted decisions being made — whether they were right, wrong or indifferent — our reality of it is this is where we are. So, it is going to take equally the kind of concerted hard decisions, timely decisions to ensure that we make the necessary adjustments to stay on our fiscal track.
“We hope the government does so.”
In the first six months of this fiscal year, the government reported that it had collected over $1 billion.
It projected it will collect $2.6 billion in revenue for 2018/2019.
Meanwhile, the deficit for the first six months of the year, albeit lower than it was at the same point in the previous fiscal year, was over two-thirds of the amount forecasted for the fiscal year.
The GFS deficit for 2018/2019 is projected at $237 million.
As of December, the deficit was $174.2 million, 73.3 per cent of the total forecast.
At the same point in 2017/2018, the deficit stood at $253.9 million.
This represents a 31 per cent decrease in the deficit period over period.
The improved performance was largely the result of the increased collections of value-added tax (VAT) and stamp tax, demonstrated in the government’s most recent fiscal performance report.
Underscoring that the government’s decisions will impact both the functions of public and private sectors, Beckles said there is a collective responsibility and the private sector is prepared to do its part, including providing “advice, whether it’s legal, financial or otherwise”.
Asked whether spending cuts were expected and where the government could tighten its fiscal belt, the president said he did not wish to speculate, but noted that these decisions come with the responsibility of leadership.
“You can’t duck the tough decision,” he said.
“The reality is here we are in 2019 with this very huge dilemma.
He continued, “We anticipate that they will be made, but made with a view that these decisions are being made for the betterment of the country’s economic welfare and wellbeing, and not just arbitrarily.
The government has expressed optimism about meeting its revenue goals.
Earlier this month, Deputy Prime Minister and Minister of Finance Peter Turnquest said the government expected increased revenue performance as it entered the more active part of the fiscal year.