NASSAU, BAHAMAS — Economic Affairs Minister Michael Halkitis reiterated his confidence yesterday that the government will achieve its target of reducing the GDP deficit to 0.9 percent in the 2023/24 fiscal year, stating, “We believe we can do it.”
Halkitis, while speaking at a weekly press briefing at the Office of the Prime Minister, stated: “We think that we will have a deficit of 0.9 percent in this budget year that concludes on June 30th, 2024. They think we will have a budget deficit of 2.6 percent. It’s a difference of opinion.
“We think that we can do it. We have been meeting their projections and think we will continue to do so, and our optimism is backed by the strength of the economy, backed by the IMF revising our growth rate upward, and the data released by the Bahamas National Statistical Institute,” said Halkitis who also expressed confidence in the government’s ability to collect taxes.
The BNSI, in its advanced estimate for quarterly gross domestic product (GDP), revealed that the Bahamian economy saw an 8.6 percent real gross domestic product growth during the first half of 2023 compared to the corresponding period last year, with real GDP reaching nearly $540 million over the first half of the previous year.
Halkitis noted that the IMF revised the country’s growth rate from 1.8 percent to 2.3 percent.
“We believe we will meet our projections. The bottom line is the economy is on the right track,” said Halkitis.
He argued that the country would still be in a much better fiscal positio even if The Bahamas attains the IMF’s growth projectionsn.
“They think that our recovery would be slower and we think it will be faster,” said Halkitis.
The IMF suggested that the government is unlikely to hit its deficit targets in its Staff Concluding Statement of the 2023 Article IV Mission.
“A strong cyclical recovery in revenues and a wind-down of pandemic-related spending have reduced the fiscal deficit to 4.1 percent of GDP in FY2022/23, bringing the central government debt down to 84 percent of GDP at end-June 2023,” it stated.
“The authorities intend to reduce the deficit to 0.9 percent of GDP in 2023/24, reaching an overall surplus of 2.1 percent of GDP by FY2026/27. The bulk of this adjustment would come from a 3½ percent of GDP increase in revenue collections, largely from improvements in administration. In addition, ½ percent of GDP in additional capital spending are expected to be funded from lower current spending. This fiscal path is expected by the authorities to bring public debt to 68 percent of GDP by FY2026/27″”
