Halkitis: Govt’s deficit reduction schedule is ‘too aggressive’
Government’s schedule for reducing the country’s deficit is “too aggressive” former Minister of State for Finance for the Progressive Liberal Party (PLP) Michael Halkitis said yesterday, adding that instead of three years to reduce the deficit to one percent of gross domestic product (GDP), the government should focus on expanding the time frame to five to six years.
Halkitis said the government might think that it has to be “drastic” in its deficit reduction, but he contended it can be adjusted more gradually than what is laid out in government’s Fiscal Responsibility Act (FRA).
“I think it’s too aggressive. I fully believe you can do it with a more gradual adjustment.
“Sometimes we believe things are worse than they are, and so our adjustment has to be drastic. Yes, adjustment is necessary, but I think we can do it over a five to six year period.”
The government’s fiscal objective for the deficit was to not have it exceed 1.8 percent for 2018/2019 and not have it exceed more than one percent for 2019/2020.
Halkitis suggested that the government’s dedication to this reduction schedule could cause it to make some unpopular decisions.
“Government could take a public relations hit,” he said.
“You can reach your deficit target, and you try to cut things, then it becomes unpopular and you receive backlash from the public and then they begin to question your whole program,” he said.
According to Halkitis, The Bahamas did not arrive at its multimillion-dollar fiscal deficit in three years, and should therefore not attempt to adjust it too rapidly.
“If you do the adjustment too rapidly you tend to cause some pain and then you erode support,” he said.
Education: Florida International University, BS in Journalism