Evaluation of $398 million SOE spend kicks off in March

Evaluation of $398 million SOE spend kicks off in March
Deputy Prime Minister and Minister of Finance, Peter Turnquest.

NASSAU, BAHAMAS – An evaluation will start this month on State Owned Enterprises and their recurring $398 million pull on the public purse —a move set to address any worsening debt concerns expressed by credit ratings agencies.

Deputy Prime Minister and Minister of Finance Peter Turnquest said the need to reign in unchecked expenditure growth remained a top priority for the government.

“We will in the month of March be kicking off a project to evaluate the government’s State Owned Enterprises—the public corporations, statutory authorities, commissions, etc.—who are funded substantially from the public purse, but with little established and structured fiscal oversight at the macro level,” he said during his mid-year Budget statement.

“Historically, successive governments have not had the effective means to evaluate the fiscal stewardship of State Owned Enterprises. Some 15.4 per cent of the government recurrent expenditure is allocated to these SOEs, which translates to some $398 million.”

It’s an expense that may undercut any savings attempt in the Budget, Moody’s credit ratings agency noted last year. The agency recently lauded some of the government’s move to implement fiscal responsibility legislation.

In his remarks, Turnquest said that even though their share of the public purse has grown, the framework to obtain the timely and consistent information necessary to assess the value for money obtained by these SOEs simply has not been developed.

But it was something the government intended to change, said the Minister.

“The project is expected to take place over three phases,” he said. “The first being an analysis of SOEs, authorities, and other quasi-government entities and their operations, so as to provide forward-looking strategies for each entity.

“The second phase will include the formation of a comprehensive strategy to cost rationalization and cost recovery for SOEs—in line with international best practices—as well as an efficient Financial and Management Reporting Model.”

Turnquest said the third and final stage will include the implementation of the strategic model, and the rollout of new budgeting, accounting and performance management.