NASSAU, The Bahamas – During his remarks at the Closing of the Mid-Year Budget Debate, on March 6, 2023, Prime Minister and Minister of Finance the Hon. Philip Davis noted that his Government expected to see increased revenues and disciplined expenditures as it worked towards its goal of a 25% Revenue-to-GDP ratio, fueled primarily by “increased efficiency and fairness in tax collection and a booming economy”.
“Already, we are seeing the fruits of our strategic approach to fiscal management come to bear, as we have successfully lowered the debt-to-GDP ratio from over 100% under the previous administration to just over 80%,” he said in the House of Assembly. “We expect continued decreases, as we seek to take it all the way down to 65% by the 2026/2027 fiscal year.”
“Spending is down against our budget projections,” he added. “Spending is also on a downward trend relative to revenues, in the first 6 months of fiscal year 2021/22 expenditure was 12.6% of GDP, for this fiscal period it was 11.6% of GDP.”
Prime Minister Davis said his administration had taken proactive measures to reduce the impact of inflation, including an increase in the minimum wage and addressing long outstanding public sector wage negotiations.
“As a result, we have directly poured tens of millions of dollars into the hands of ordinary hard-working Bahamians and mandated the private sector do the same,” he said. “This resulted in across-the-board salary increases for tens of thousands of public servants and a quality-of-life increase for all families reliant on the minimum wage to make ends meet.”
“The result of the increase in minimum wage meant that those persons received an extra 1 week’s pay every month or an increase of 24% in their base salary,” he added.
Prime Minister Davis noted that both of those moves were necessary to protect people as much as possible from the “ravages of the global inflation crisis”.
“We have done this without taking on extraordinary funding to support our balance of payments and without any drastic rundown on our reserve levels,” he said.
He noted that his Government sees no downsizing by Bahamian businesses.
“In fact, we are seeing current businesses expand and many new businesses springing up every day,” Prime Minister Davis said.
“Our confidence and faith in the Bahamian people is being reciprocated, as we see Bahamians investing more and propelling the nation’s economic growth.”
Prime Minister Davis pointed out that in his first Supplementary Budget, he spoke of the need for a fully empowered Revenue Enhancement Unit.
“Today, we are seeing the results of this effort,” he said. “We have to ensure that everyone is paying their fair share in this country.”
“Paying taxes is not something people can just choose not to do,” he added. “The vast majority of people are paying their taxes, and it’s not fair for those who follow the law to shoulder the financial burden of those who do not.”
Prime Minister Davis that they were seeing the best real property tax compliance rates in many years.
“The worst culprits when it came to non-payment, and the records reflect this, were many owners of the most valuable properties in The Bahamas,” he added.
“We have ensured that they are paying their fair share.”
Prime Minister Davis said that much of the revenue gains can be attributed to the widespread economic growth his Government’s policies had created.
“More Bahamians are working now and many of those who are working are making more money to take care of their families and spend within the domestic economy,” he said. “Tourism numbers are at record levels, bringing money into our economy.”
“We have also achieved results through more disciplined spending, prioritizing high impact initiatives, and making hard decisions where necessary,” he added.”
Prime Minister pointed out that where certain projects or activities had exceeded the allocation in the budget, they had been funded mainly by re-allocation within the budget, not by unfunded increases in the budgetary allocations.
“Where we have increased the budgetary allocations, for example in Social Services and with respect to certain wage payments, they have been supported by money in the bank, and informed by our need to take care of those who need it the most,” he said.
“We are fully committed to our deficit targets in this fiscal year and fully committed to empowering and providing support for Bahamian people and businesses.”
Prime Minister Davis stated that his Government’s reforms were “far from done.”
His Government, he noted, was moving ahead with its review of The Central Bank Act, The Statistics Act, and the Public Debt Management Act.
“With respect to The Central Bank Act, we have tabled an amendment to align our legislation with the IMF’s intent,with respect to the use of the special dispensation of Special Drawing Rights,” he said.
“We are going even further with our reforms, as the Central Bank has recently indicated to the Government that they will propose another amendment to bring clarity around open market transactions by the Central Bank,” he added.
Prime Minister Davis said that, with the Statistics Act, the present staff had been disadvantaged and his Government must fix that by legislation.
“It is an unfortunate thing,” he said.
Prime Minister Davis pointed out that his Government was “turning the page and entering a new phase of economic growth, healthy fiscal performance, low unemployment, and unprecedented investments in and by the Bahamian people”.
“We have only been in office for a year-and-a-half; but I believe that the Bahamian people can clearly see and feel the positive impact of our policies and the new direction that the country is headed in,” he said.
“On our agenda for the remainder of this fiscal year, we will initiate an unprecedented investment in food security, roll out a significant increase in social support, continue our investment in small and medium sized businesses and lend support for new businesses through the SBDC,” he added.
Prime Minister Davis stated that, in essence, his Government will continue with its “people-focused agenda”, which also included things like addressing learning loss, redeveloping and expanding 14 airports throughout the Family Islands, protecting The Bahamas’ borders, recruiting hundreds of new Defence Force, Police Force, and Immigration officers, and renovating Family Island clinics.
“We have gotten off to a good start,” he said. “Our policies have started a much-needed course correction.”
“We have reached many people, and we know there are yet many more still to reach,” he stated.
“Everyone is important to us.”
“And by working in concert with the Bahamian people, through God’s grace, I believe that we can successfully transform our economy and our Government to create a healthier, vibrant, more inclusive and more equitable country for all,” Prime Minister Davis added.
“May God Bless the Commonwealth of The Bahamas.”