NASSAU, BAHAMAS — Prime Minister Philip Davis said yesterday that the government intends to borrow just over $70 million to offset budget shortfalls for the remainder of this fiscal year and the next.
Following his budget communication Prime Minister Davis, the Minister of Finance Philip gave notice of the government’s intention to table the borrowing resolutions in the House of Assembly at its next sitting. The government is seeking to borrow $33 million to cover the remainder of the 2023/2024 fiscal year and just over $37 million to cover the shortfall estimated in the 2024/2025 budget.
During this budget communication, Prime Minister Davis noted that total revenue amounted to $2.2 billion in the first nine months of the fiscal year. “This marks an increase of $112.4 million, or 5.4 percent, as compared to the previous fiscal year. At this time, total revenue stood at 66 percent of the budget forecast, not out of line with expectations owing to timing considerations. This improvement in revenue performance resulted from an increase in tax revenue of $136.9 million to a total of $2 billion. Tax revenue to date amounts to 67 percent of the budget forecast,” he stated.
He noted that for the first three quarters of the fiscal year, taxes collected on property grew by $18.4 million and totaled $145.6 million, which represents 74.6 percent of the budget target. “This increase period-over-period was expected due to the strengthening of collection exercises under the Real Property Tax Act, a majority of which is collected from non-Bahamians. To demonstrate our revenue enhancement efforts, I can report that real property tax accounts experienced a 3 percent increase in 2023 compared to 2022, and a further 2.3 percent increase in 2024 compared to 2023. This increase is reflected in the 2023 real property tax billings exceeding those of 2022 by 14.6 percent. As of the current year, 2024, the real property tax billings have surpassed those of 2023 by 5.1 percent. It is evident that the increase in revenue cannot solely be attributed to inflation, but rather to the diligent collection efforts of our dedicated public officials,” he noted.
He added, “VAT receipts improved by $58.5 million, or 6.3 percent, and amounted to $993.9 million following amendments to the VAT Act strengthening collections enforcement. This total accounts for 62.5 percent of the budget target. Data indicates that the number of VAT registrants has risen by 9.4 percent in 2023 compared to 2022, and by an additional 2.9 percent in 2024 compared to 2023.”
Licenses to conduct special business activity, which comprise business licenses and communication levies, increased by $43 million and totaled $126.3 million. To date, this represents 80.1 percent of the budget forecast. Taxes on international trade and transactions increased by $11.1 million and totaled $502.3 million and can be largely explained by the following items: Customs and other import duties increased by $4.4 million in the first three quarters of the 2023/2024 fiscal year, an increase of 2.4 percent to $190.5 million. To date, this represents 76.1 percent of the budget target. Departure tax collections increased by $7.2 million and totaled $134 million, representing 67.2 percent of the budget target.
Although non-tax revenue decreased 9.0 percent overall, sales of goods and services improved 13.4 percent. This was due to an increase in revenue garnered from fees and service charges. Non-tax revenue equated to 59.2 percent of the budget projection.
Total expenditures increased by $76.9 million to $2.4 billion during the first nine months of the fiscal year, fulfilling 69.7 percent of the budget target. Specifically, recurrent expenditures increased by $35.9 million to a total of $2.2 billion, accounting for 70.3 percent of the budget forecast.
The 2024/25 budget estimate for total revenue amounts to $3.54 billion. According to the Prime Minister, this estimated revenue excludes reimbursement of $75 million from the Grand Bahama Port Authority during this budget year.
Total expenditures are estimated to amount to $3.61 billion, of which recurrent expenditures account for $3.27 billion and capital expenditures for $344.5 million. The fiscal deficit is estimated at $69.8 million, or 0.5 percent of GDP, with the primary balance showing a surplus of $586.9 million, or 3.9 percent of GDP. Given this, the debt-to-GDP ratio has been projected at 75.3 percent of GDP at the end of fiscal year 24/25.
