NASSAU, BAHAMAS — The Fiscal Responsibility Council (FRC) has found that the Fiscal Strategy Report (FSR) 2020, while “broadly compliant” with the content framework prescribed by the Fiscal Responsibility Act (FRA), raises issues regarding the quality and availability of national data.
The council, in its report on the 2020 fiscal strategy report, noted: “The FSR 2020 is broadly compliant with the content framework prescribed by the FRA. However, there is a need for tightening and strengthening of the structure of the analysis, including strengthening linkages of performance data and macroeconomic conditions to projected outcomes, and connectivity of strategies and projected outcomes to supporting justifications.
“As FSRs are subject to independent assessments of compliance, the structure should closely align with the content requirements and should build a framework of analysis explicitly around those requirements with focused integration of other supporting content for effective analysis. Future FSRs should seek to achieve this.
“The extent and quality of the sourcing of data are considered material deficiencies, notably the lack of national statistics for domestic income projections, including domestic income forecasts by its components.”
The council noted that future FSRs should provide annual values for GDP for the required historical, current and projected periods, including a breakdown of those values by the components of GDP — private consumption, business investment (capital formation), government spending and net exports — as the typical presentation of national accounts and as the FRA requires.
“Doing so would provide a more complete framework for performance and outlook, and also serve as a base for analysis when such analysis calls for examination of sectors, specific economic activities and the associated policies — implications, impacts, outcomes — and demonstrating linkages of strategies, performance and projected outcomes,” noted the report.
“FSR 2020 is positioned mainly around projected overall growth rates, the underlying components of which were not made available.”
It also pointed out that the provision of data and reporting by quarter would also be helpful to analysis by the FRC, considering that GDP statistics are presented by calendar year versus a fiscal year that runs from July 1 to June 30, and an FSR reporting period denoted by calendar year.
“The experience of two separate and very distinct shocks in separate halves of a single fiscal year, yet distinct calendar years, has presented challenges to FSR 2020 as far as clarity and specificity of analysis in the respective macroeconomic contexts,” the council said.
“Tables of data — fiscal and real sector — by quarter for the relevant and comparative 12-month periods would offer a more complete and accurate picture of performance and outlook.
“For instance, FSR 2020’s discussion of COVID-19 considers it mainly through the lens of the final six months of fiscal year 2019-2020.”
It added: “Restrictions on movement and business activity began 11 days prior to the end of third fiscal quarter, and border closure within the final week. Given this timing, it can reasonably be concluded that the first three quarters of FY 2019-2020, through March 2020, mainly represented pre-COVID-19 conditions.
“FSR 2020’s broad review of the first six months of 2020 (January to June) to the same period of the previous year, as opposed to assessing the first two quarters of 2020 separately, given the shock of COVID-19 fallout in the April to June quarter, diminishes the severity and suddenness of the global pandemic’s impact occurring in that June quarter.
“Separating the analysis provided for the first six months of 2020 by quarter would have allowed for an accurate assessment of immediate impact, and led supporting rationale for ensuing predictions.”
The council also noted that the unavailability of unemployment data is also a critical area.
“The last available statistic from DOS is for May 2019. FSR 2020 provides data in relation to payouts by the National Insurance Board for various unemployment benefits and assistances, but in the absence of corresponding labor force statistics, there is no context to support analysis,” the council said.
Regarding employment, the FRC found the 2020 Fiscal Strategy Report “somewhat compliant”, noting no rates of unemployment are presented for the relevant periods.
“The rates of unemployment presented in FSR 2020 are as of May 2019, and no unemployment rates statistic — actual, provisional or otherwise — is presented to assess the impacts of the extraordinary events in fiscal year 2019-2020,” the council noted.
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