The government is aiming to shave $100 million per year over the next four years from its annual $400 million to state-owned enterprises (SOE), Deputy Prime Minister and Minister of Finance Peter Turnquest said yesterday, adding that those entities are inefficient, uncompetitive and must retool fee structures and adopt new business practices to reduce their burden on government coffers.
The government hopes SOE reforms will mean they will eventually become self-sufficient and aid in the government’s fiscal consolidation plan.
According to Turnquest, who made the remarks during the start to the 2020/2021 budget debate in the House of Assembly, the Ministry of Finance is already encouraging the Bahamas Development Bank, the Small Business Development Centre, the Bahamas Entrepreneurial Venture Fund Limited and the Bahamas Agricultural Industrial Corporation (BAIC) to find ways to reduce operational expenditure during the 2020/2021 budget year.
“Every year, the government spends over $400 million subsidizing state-owned agencies, many of which are inefficient and uncompetitive. To this end, we have targeted a $100 million annual reduction in subventions over the next four years, as these entities move to optimize efficiency and cost recovery strategies,” Turnquest said.
“Not only will this make SOEs more dynamic, efficient and self-sufficient, it will also reduce the amount of money the government allocates to subsidize these entities. SOEs will have to adopt new business practices, they will have to look at their fee structures and they will have to explore opportunities to consolidate operations to better use public funds.”
Turnquest added that the government is exploring new sources of revenue from commercial services provided by its agencies.
“We also intend to support both domestic and foreign direct investment to help us to grow the economy,” he said.
“Together, these efforts will eventually allow us to achieve and sustain our fiscal consolidation or balanced budget objectives.”
Turnquest further noted in his speech that the Financial Administration and Audit Act, 2010 will be amended to require that government agencies whose operating budget receives more than 50 percent from the central government will have to produce and submit monthly and quarterly financials.
“This amendment will not only allow for a more programmatic approach to government budgeting, but will also aid in the cost rationalization project currently being conducted on SOEs,” he said.