Govt looking at controls to protect public finances from misuse
Government is exploring fiscal tools to protect public finances from misuse and overspending, Deputy Prime Minister and Minister of Finance Peter Turnquest said yesterday, explaining that reducing the country’s debt to GDP (gross domestic product) ratio and putting controls on government’s annual expenditure are paramount to curtailing wastage in the public sector and bringing the country’s economy back to a state of growth.
Turnquest, speaking at the Bahamas Institute of Chartered Accountants’ and the Association of Certified Fraud Examiners Bahamas Chapter’s seventh annual Fraud, Ethics and Compliance Seminar, said government will also look at a target level of concessions given to foreign direct investors and domestic investors, and look at those numbers as a percentage of GDP in order to understand the benefit to the economy. He added that government now has to look at public service wages as a percentage of the country’s GDP in order to prevent unsustainable inflation of the public sector.
Government has recently moved to carefully cull the country’s inflated public service, in order to bring government payroll back to sustainable levels.
“We want to look at wages as a percentage of GDP to ensure we put in some controls,” said Turnquest.
“We want to put in some guidelines to help build in the kind of discipline we need in order to ensure we arrest this debt slide that we have, and bring it down eventually as the economy expands to a more reasonable level.”
Turnquest said his government wants to bring the country’s debt-to-GDP level into the 50s from the 62 percent it currently sits at.
The deputy prime minister took a jab at the former Progressive Liberal Party administration, suggesting that discretionary spending programs implemented by the former government did not have the required controls to ensure that the government’s assets were protected.
“We had the run-up in wages, which is a significant number over the last year up until the election time. All of the sidewalks that you would have seen on the sides of the roads going to nowhere that nobody will ever walk on between here and Jesus coming back again,” said Turnquest.
He added that in protecting the public finances from misuse and overspending, rules have to be put in that protect the country in times of unforseen disasters, especially those that require large capital investments after they occur.
“Of course we recognize that in putting in any kind of fiscal rule, you have to have the ability to react to any external shocks or to natural disasters,” he said.
“We’re contemplating escape clauses, but even with escape clauses, we want to ensure that, when that happens, that the minister of finance has to declare publicly in Parliament what the event was, what action needed to happen, what it’s going to cost, and must have a plan within three years to get us back on to track and back in line with the fiscal rules. We are in the interim stages of designing that framework.”
He said government is working closely with the International Monetary Fund and the Inter-American Development Bank to design that framework.