NASSAU, BAHAMAS—The Davis administration’s 2026/2027 Budget Communication contained no major surprises, according to a well-known banker who cautioned against “acting like we’ve arrived” as he pointed to continued structural, fiscal, and development challenges facing the country.
Fidelity Bank (Bahamas) Chief Executive Officer Gowon Bowe said while the Budget communication reflected progress in several areas, there remains mush work to be done. Bowe noted that the comunicaiton referenced rating agency assessments, but did not fully reflect the current status of The Bahamas in the global credit environment.
“It spoke about the rating agencies now being consistent,” Bowe said. “But what it failed to really articulate was that all of them have put us at a stable outlook, which means we still have a lot more work to, if you will, influence the decisions in a positive way, at least for the next 12 months.”
He noted that while the outlook is stable, The Bahamas remains below investment grade and still requires sustained fiscal discipline.
Bowe said one of the major missed opportunities in the communication was the limited reference to long-term national planning.
“Other than referencing the Ministry of Innovation and National Development, there was no reference to the National Development Plan,” Bowe said. “The National Development Plan is the mindset that we need in the country, which is saying that we’re going to do things over a generation.” He said national development cannot be assessed within short political or fiscal cycles.
Bowe also raised concerns about economic data consistency, particularly the relationship between GDP growth and inflation, suggesting that improvements in statistical capture may be influencing headline figures, rather than purely organic growth.
On infrastructure, Bowe said capital spending levels remain a key concern, particularly in relation to long-term development needs.
“In developing countries, it has widely been suggested that an annual expenditure of 5 percent of GDP should be the annual expenditure,” he said. “The government is speaking of around 400 million.”
He said that level of spending raises questions about whether infrastructure investment is sufficient.
Bowe also addressed housing policy, questioning the effectiveness of changes to the first-time homeowner exemption threshold.
“The increase in the first-time homeowners exemption to $600,000 seems an unnecessary policy initiative if the focus is on affordable housing,” he said. “I don’t know how many persons are qualifying for a $400,000, $500,00 or $600,000 home.” He added that affordability pressures are more realistically concentrated at lower price points.
“If you’re speaking about affordable housing, it probably is in the area of $200,000 to $300,000,” he said.
On taxation, Bowe warned that increased VAT variability could complicate compliance.
“The policy initiative by introducing all of this variability in the tax rate is one that is only going to increase complexity and ultimately lead to lower compliance,” he said.
He also questioned the introduction of a public-private partnership (PPP) framework review, suggesting the need for clarity on past arrangements.
“You need to explain what you were doing before and what you believe would be the losses as a result of not doing this previously so that you can show how you’re closing the gaps,” he said.
Despite his concerns, Bowe said there was little in the Budget that was unexpected, but stressed that the emphasis should move beyond headline figures toward deeper analysis of trends and structural issues.
“Unfortunately, we’ve not historically seen that in the budget debates,” he said. “We tend to hear speeches that sort of focus on headline numbers, as opposed to what I’m going to call the trends.”
He added that while progress exists, national messaging must remain grounded in realism.
The Government is projecting a fiscal surplus of $223.1 million and total revenue of $4.4 billion for the 2026/2027 financial year, as Finance Minister Michael Halkitis outlined a Budget framed around stability, targeted investment, and revised fiscal expectations in the House of Assembly.
Halkitis said revenue for the fiscal year is estimated at $4.4 billion, or 23.6 percent of GDP, while total expenditure is projected at $4.1 billion or 22.4 percent of GDP. This includes $3.7 billion in recurrent spending and $415.8 million in capital investment.
Based on these figures, the fiscal surplus is projected at $223.1 million, equivalent to 1.2 percent of GDP, with a stronger primary balance surplus of 5.2 percent of GDP. The debt-to-GDP ratio is expected to decline further to 59.9 percent by the end of FY2026/2027.
The current projection marks a downward revision from earlier estimates contained in the Fiscal Strategy Report 2025, which had placed the surplus at about 1.7 percent of GDP—roughly $300 million. The revised outlook therefore reflects a reduction of approximately $70 million to $100 million.
Halkitis said the adjustment reflects a combination of factors, including increased spending commitments and evolving global conditions, particularly geopolitical tensions affecting energy markets and import costs. He also highlighted deliberate policy decisions to increase investment in the health sector, including additional funding for the Public Hospitals Authority and expanded hospital services.
Despite the revision, the Government maintained that the fiscal position remains consistent with responsible financial management, even as it prioritises social and economic investment.
