Government is not surprised by Moody’s suggestion that it might miss its target for fiscal deficit reduction before the end of the 2018/2019 fiscal year, Acting Prime Minister and Minister of Finance Peter Turnquest said yesterday, adding that the Ministry of Finance has been very transparent in its conversations with Moody’s.
Turnquest said government understands there is a lot more work to do to meet its fiscal targets, including continuing to take a “creative and responsible approach to spending patterns”.
According to Turnquest, government has been living up to its fiscal commitments, though he explained that revenue is still behind due to changes in gaming tax and the value-added tax increase that have yet to come into effect.
“We did not get where we are overnight, and it’s going to take a long time to get out of it,” he said.
“Generally, we are in line with where we thought we would be, and we look forward to the rest of the year.
“They (Moody’s) are making an observation, and it is an observation, that we have consistently put forward, as we look at these reviews and mark our progress throughout the year. The fact of the matter is we have been making some significant gains resulting in the upgrade of the outlook from negative to stable, but we recognize that there is still a lot of work to be done.
“We recognize that, in order to lock in the gains that we have achieved, that we have to continue to be responsible with our spending throughout the rest of the year, and we have a three-year consolidation plan which results in a projected surplus in year four. In order to achieve that it means we have to continue to be very watchful, we have to continue to invest in infrastructure and growth-enhancing programs to ensure that we expand the revenue base, at the same time providing opportunities for Bahamians, and also on the other side, ensuring that we continue the growth in expenditure as is required by our fiscal responsibility legislation.”
Moody’s agreed that government could still stabilize its debt ratios, while Turnquest is hopeful that government’s three-year plan under the fiscal responsibility legislation will result in a surplus. Turnquest said The Bahamas government’s and Moody’s views on the country’s fiscal future align.
“We don’t take it as a warning, because, again, they have their views, we have our views; but we are certainly aligned in the thinking that we do have to maintain our spending patterns to ensure that we do meet our objectives,” Turnquest said.
“This is not unusual, and, of course, when we have our conversations with them, we discuss a range of things. This would have been a discussion we would have had, and we would have pointed out with full transparency our concerns and what we assess as the risk going forward with meeting our fiscal plans.
“I don’t see it as a warning or any negative. I think it is a very reasonable and responsible comment that they have made, and again, it aligns with our own views.”
Moody’s wants to see government “build a track record of compliance” with its new fiscal rules. Today, government presents its mid-year performance review in the House of Assembly.
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