The Organization for Responsible Governance’s (ORG) Council Chairman and Co-Chair of Economic Development Robert Myers said yesterday that the government’s quarterly report on budgetary performance is a good step toward accountable and transparent governance of public finances.
Speaking with Guardian Business, Myers said while there are some good takeaways from the report, including the trimming of the fat in the public service, as well as significant deficit reduction, a lot more can be done to balance the budget.
He also credited the government for moving toward an accrual-based accounting system as opposed to cash-based.
While calling the report “very encouraging”, Myers said, “I think that there are some problems there because of the unknown debt, right, that had an impact; the down payment for the [Grand Lucayan resort] in Freeport had a negative impact, but what we are seeing is at least they are holding to some accounting standards; and even if we haven’t gone to accrued-based accounting, as long as there are no skeletons in the closet; that the public sector is forced to reveal its liabilities as they incur them.
“You can match that against a budget to some degree of accuracy.
“That’s a big win. That transparency is a big win.”
The report, which was released on Monday night, shows that overall, the government reduced the deficit by more than $56 million when compared to the same period in the last fiscal period primarily due to increased value-added tax collections and stamp tax collections; and expenditure increased by $3.5 million, accounted for by a $39.1 million increase in recurrent expenditure and a $35.6 million decrease in capital expenditure.
The Bahamas’ estimated debt as of September 2018 was $7.3 billion, according to the report.
Yesterday, Myers said The Bahamas has to get to a balanced budget, but taxing the citizenry cannot be the only way.
He said there are hundreds of millions of dollars on the table to be saved every year if the government addresses major inefficiencies, wastage and accountability issues in the public sector, particularly in a number of the public corporations that rely on government subventions.
In the Ministry of Finance’s report, the government also reported that revenue has increased by 13 percent to $513 million, in large part because of the increase in value-added tax (VAT) collections – from $167.4 million to $199.4 million quarter-over-quarter.
“You’ve got to stop putting the burden on the citizens and the public and start looking within,” Myers said.
He said for this to happen the government has to do the hard work.
“Those inefficiencies have got to start being a factor in the government’s ability to correct the economic and financial woes of the country,” he said.
Myers also applauded the government for implementing fiscal responsibility legislation, which is expected to be a major component to reforming fiscal accountability.
“They are doing yeoman’s work,” he said of the government.
“But, you have to do more.
“You’re getting that by good legislation, congratulations; check that box.
“We’re getting it by increased revenues, but you’re doing that through tax, versus creating efficiencies and accountability.
“That’s the difference we are talking about here.”
“We’ve reached a pricing elasticity in taxation and competitiveness in this country, and if we keep going through that, it’s going to break.”
The government has also slashed civil service compensation by $20 million in the first quarter of this fiscal year, compared to the same period in 2017/2018, according to the report.
Myers said while that is significant, it is still not enough.
“There is still too much fat in the public sector, and the reason that’s important is because of another factor… If we don’t get efficiencies and accountability in the public sector then the government’s only means to meet its obligation is to continue to tax its citizens.
“We are going to tax ourselves into annihilation.”