NASSAU, BAHAMAS- The Bahamian economy grew in the first quarter of FY2024/25, but the fiscal deficit nearly tripled compared to the previous year, reaching $185.4 million due to higher spending on infrastructure, wages, and debt servicing.
The Ministry of Finance, in its three-month report on budgetary performance for the fiscal year 2024/25 (July–September), noted: “During the first quarter of FY2024/25, the Bahamian economy continued to benefit from robust tourism-driven growth and foreign direct investment-related construction activity, amid a moderation in inflationary pressures. These outcomes sustained the positive domestic demand momentum and employment conditions.”
Government revenue for the first quarter of FY2024/25 amounted to $682.2 million, an increase of $18.7 million (2.8 percent) compared to the same period last year, representing 19.3 percent of the annual budget target. This was driven by a $12.5 million (2.1 percent) rise in tax receipts, fueled by gains in departure, business, and property taxes. Non-tax revenue also increased by $6.2 million (10.4 percent), reaching $66 million, with notable contributions from fees, service charges, and property income.
On the expenditure side, total spending rose by $142.6 million (19.7 percent) to $867.7 million, or 24 percent of the budget target. Recurrent expenditure increased by $83.5 million (12.6 percent) to $743.9 million, with key allocations for compensation (29.1 percent), payments for goods and services (21.3 percent), and public debt interest (15.1 percent). Capital expenditure saw a significant jump of $59.1 million (91.5 percent) to $123.8 million, primarily due to a $51.7 million boost for roadworks and school infrastructure repairs, along with $7.4 million in capital transfers.
The fiscal deficit for the quarter widened sharply, nearly tripling from $61.5 million in the prior year to $185.4 million. Financial activities during this period included an $86.2 million increase in financial assets and a $305.4 million rise in liabilities. Bahamian Dollar debt grew by $210.6 million, primarily through bank loans and Central Bank advances, while foreign currency debt increased by $94.8 million due to new borrowing offsetting scheduled repayments.
Debt repayments totaled $406.8 million, with $285.4 million (70.2 percent) settled in domestic currency. As a result, the government’s total debt rose by $305.4 million to $11.7 billion, equivalent to 79.1 percent of GDP, compared to 77.6 percent at the end of June 2024.
The rise in tax revenue was primarily driven by international trade taxes, which grew by $15.2 million (8.8 percent) to $187.2 million. A key factor was the $26.4 million (53.3 percent) boost in departure taxes, attributed to stricter enforcement and recent policy changes targeting cruise passengers. Meanwhile, business license fees surged by $7.5 million (84.8 percent) to $16.4 million, driving a $9.5 million (50.6 percent) overall increase in taxes on the use of goods and permissions.
However, some tax categories saw declines. Gaming taxes fell by $9.6 million due to timing issues, and general taxes on goods and services dropped by $5.2 million (1.4 percent), despite a $6.7 million (23.5 percent) rise in stamp taxes and a modest $1.5 million (0.4 percent) increase in VAT. These gains were offset by a $13.4 million (97.4 percent) drop in excise taxes, reflecting a one-time arrears payment last year.
Recurrent expenditure for the quarter rose by $83.5 million (12.6 percent) to $743.9 million, representing 22.8 percent of the annual target. Employee compensation increased by $8.2 million (3.9 percent) to $216.7 million, reflecting salary adjustments, promotions, and new hires. Spending on goods and services jumped by $39.6 million (33.2 percent) to $158.6 million, with significant increases in rental costs (up $8.8 million or 43 percent), utilities (up $5.3 million or 58.9 percent), and IT and facility maintenance services (up $21.7 million or 39.2 percent).
Expenditure on general public services grew by $40.9 million (15.9 percent) to $298.5 million, driven by employment costs, subsidies to public corporations, and service contracts. Public order and safety spending rose by $13.7 million (21.8 percent) to $76.3 million, with notable increases in police services and court operations. Economic affairs expenditure climbed by $11.1 million (21 percent) to $64.1 million, mainly for construction and transport. Education spending increased by $9.2 million (11.4 percent) to $90 million, while social protection costs grew by $5.9 million (11.3 percent) to $57.8 million.
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