NASSAU, BAHAMAS — With the deficit expected to rise to $1.3 billion in the upcoming fiscal year, the 2020/2021 budget has offered an ‘excellent opportunity’ to initiate serious discussion on fiscal reform, according to a local economist.
Rupert Pinder, also a lecturer at the University of the Bahamas, said: “There must first be a recognition of the herculean task the Ministry of Finance is faced with. I felt as though this budget would have offered some opportunities.
“In my view, given what we are facing it is important that we speak to more than just a one-year cycle. While the budget covers expenditure and revenue for a 12-month period, what we are facing is likely to be two or three years.”
Pinder said: “We need to address the deficit and debt level and we need a plan to address these levels over the next two to three years. We also need a strategic plan that seeks to address state owned enterprises.”
While delivering the 2020/2021 budget communication last week, Deputy Prime Minister and Minister of Finance K Peter Turnquest said government is projecting roughly $21 million in savings from a decrease in subventions to state-owned enterprises (SOEs).
“There is an opportunity to look at the state-owned enterprises. I think there needs to be some reviews of those state-owned enterprises. It is one thing to cut their budgets but it’s another discussion to look at their efficiency,” said Pinder.
He continued: “I thought the budget presented an excellent opportunity to get into the discussion of fiscal reform particularly in light of the fact we are going to have a fiscal deficit of $1.3 billion. I felt there were some opportunities this budget would have presented. There is an opportunity to look at a strategy in terms of fiscal reforms, debt reduction and also the issue of state-owned enterprises.”
Last week, Turnquest warned the government’s fiscal plan will come at “a necessary but unprecedented cost”.
He noted that given the current state of the domestic economy, the outlook for the near-term is “very subdued”. The fiscal deficit is pegged at some $1.3 billion, or 11.6 percent of GDP for the upcoming fiscal year.
It represents the largest deficit to be incurred by any Government in the history of The Bahamas.