‘The People’s Budget’ reveals allocation shifts
Branded as “The People’s Budget”, the Minnis administration’s fiscal plan for 2018/2019 centers around increased debt repayment, the creation of additional revenue through increased taxation, tax exemptions on certain items and a series of adjustments to the allocations in several ministries that are expected to position the government on better financial footing.
During the budget communication delivered in Parliament last Wednesday, the Free National Movement (FNM) outlined its plans for public sector reform and improved fiscal management over the next three years, despite proposing an increase on the rate of value-added tax from 7.5 percent to 12 percent.
The increase will take effect July 1.
According to the budget, the Treasury Department’s allocation for 2018/2019 was slashed by $267 million — from $367.8 million to $100.8 million. Much of that reduction is the result of increased public debt servicing — $725.2 million in 2017/2018 to $1.09 billion in 2018/2019.
This represents an increase in debt servicing of around 60 percent.
New line items were created for debt servicing-interest and debt servicing-redemption.
Debt service-redemption has been increased from $432.7 million to $709.4 million. Debt service-interest payments will increase by $90 million — from $292.4 million to $381.3 million. In the last fiscal period, the government increased public debt servicing — from $287 million in 2016/2017 to $432.7 million in 2017/2018.
Meanwhile, the Ministry of Finance will receive $367.8 million in the upcoming budget.
This represents $153 million more than the $213.9 million it received in 2017/2018.
Under a new line item, “outstanding commitments — various ministries and departments” the government allocated $50.2 million.
Under the line item, the “National Drug Plan (Arrears)” the allocation will increase from $7.5 million to $15.9 million.
Meanwhile, $15.7 million has been allocated to cover the arrears associated with the Water and Sewerage Corporation (WSC) and the Bahamas Telecommunications Company (BTC), and another $11.9 million to service “BPL Arrears Action Plan”.
The Ministry of Finance will also see its allocation for tourism contractual obligations increase from $20 million to $45 million.
The Ministry of Public Works and National Insurance will see an increase of $40.3 million — from $249.5 million to $289.8 million.
The government has budgeted $19 million for the Department of Inland Revenue, a resource aimed at strengthening the government’s enforcement and revenue collections. The department received $7.1 million in 2017/2018 and $5.5 million in 2016/2017.
As it relates to crime, the government resolved to target the root causes and implement modern crime fighting strategies. Again, the Ministry of National Security’s budget was reduced, this time by $6.47 million — from $13.92 million to $7.45 million.
In the previous fiscal period, the government reduced the ministry’s budget by approximately $800,000. Despite this, at least two law enforcement agencies will receive notable increases.
The Department of Immigration’s budget increased from $21.76 million to $35.52 million. The defense force’s budget will increase from $55.38 million in 2016/2017 to $59.87 million. Meanwhile, the police force will receive $127.9 million, down from $136.26 million in 2016/2017.
The government has also outlined plans for education early in its terms, including mandating pre-school learning for all children two-and-a-half years of age; enhancing provisions for special education; expanding technical and vocational education; introducing a pilot program for single gender classes at the junior level; and establishing a national education commission.
In the budget, the allocation for the Ministry of Education decreased by nearly $2 million — from $94.54 million to $92.66 million.
The Department of Education’s allocation went up by over $9 million.
The government has budgeted $205.63 million for the department compared to the $196.33 million in 2017/2018.
The budget for the Ministry of Agriculture and departments of agriculture and marine resources also decreased.
The government has budgeted $19.3 million for 2018/2019. It budgeted $21.9 million in 2017/2018.
The departments of agriculture and marine resources also saw drops in their allocations.
The Department of Marine Resources will get $2.8 million in 2018/2019.
The department received $3.2 million in 2017/2018.
The government has pledged to build a subdivision per year in which affordable housing lots, outfitted with infrastructure, will be sold for under $30,000.
In the budget, the allocation for the Ministry of the Environment and Housing increased by nearly $9 million.
The ministry will receive $26.8 million in 2018/2019, compared to the $18.1 million in the previous fiscal year.
But the bulk of that increase can be attributed to the nearly 100 percent increase in the allocation for the Bahamas Public Parks and Beach Authority.
The authority will receive $13.8 million in the upcoming fiscal period. In 2017/2018, the authority got $7 million.
The line item “Development Contracts” was also increased from $50,000 to over $1 million.