CFAL report: Despite VAT revenue ‘there remains cause for concern’ on economy
An expanding economy is for naught if it is not translating into decreased unemployment and declining debt levels, notes the concluding statement of CFAL’s first quarter report on the Bahamian economy.
CFAL’s report explains that despite the government’s hike in value-added tax (VAT) in order to improve the country’s government finance statistics (GFS) deficit and improve the country’s finances, “there remains cause for concern” on the unemployment, economic growth and debt level fronts.
“While the government may be basking in the modest improvements in economic growth, a bigger dilemma is the inability of this growth to translate into a lower unemployment rate and declining debt levels,” the report states.
“If the economy is expanding in areas that do not hire Bahamians or affect Bahamians directly, it is unlikely that the unemployment rate will decrease significantly below the structural norms and long-term sustainable growth will continue to be out of reach.”
The report points out that the significant reductions the government has made on capital expenditure “relative to recurrent expenditure” demonstrate its traditionally high wage and benefit costs that have led to muted investments in infrastructure, healthcare and education, “which are essential to driving economic growth”.
“For the fiscal half-year 2017/18, capital spending totaled $131 million compared to $87 million during the same period of FY 2018/19 and the $149.66 million forecast during the period,” the report notes.
It noted the projection in a report released by the Department of Statistics that the Bahamian economy will grow by 2.2 percent in fiscal year 2018/2019.
“According to the Department of Statistics, real GDP (growth domestic product) stood at $10.763 billion at the end of 2018, with output driven by the foreign currency real estate sector, wholesale and retail trade industries, financial and insurance segments, along with accommodation and food service industries,” the CFAL report states.
“Average economic growth over the past six years was relatively flat at 0.30 percent, a convincing indication of the fragile state of the Bahamian economy.”
Education: Florida International University, BS in Journalism
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