The government is projecting a deficit in the upcoming fiscal year, which starts on July 1, of $131.6 million — a $389.5 million decrease from the current year’s projected deficit, Prime Minister and Minister of Finance Philip Davis announced in his 2023/2024 Budget Communication to Parliament yesterday, adding that there are no new taxes and no increased taxes.
“By raising much-needed revenue without adding any new taxes, we can expand the range and quality of services and investment on which Bahamians rely,” said Davis in the two-hour-long communication.
Recurrent revenue is projected to be $3.316 billion and recurrent expenditure is projected to be $3.085 billion in the 2023/2024 fiscal year.
Capital expenditure is projected at $364.6 million, an increase of $5.6 million.
“Barring the advent of unforeseen developments, we are still on track to achieve a balanced budget by 2024/2025,” the prime minister said.
Davis reported that public revenue receipts were strong over the previous nine-month period.
“This was due to legislative reform, effective policy decisions, strengthened economic conditions and more efficient collection efforts,” he said.
“Analysis of the trends of the first three quarters of this fiscal year, and the years prior, suggest that the government is potentially set to exceed the $2.85 billion target set forth in the February 2023 Mid-Year Supplementary Budget.
“I am confident the revenue outturn at the end of the fiscal year 2022/2023 will near $2.9 billion.”
Public spending has remained on track, and is well within the budgeted amount, the prime minister reported.
“For this reason, I am confident that expenditure at end of the fiscal year 2022/2023 will almost reach the target of $3.1 billion set in the Supplementary Budget.”
Davis also reported that as a result of net borrowing activities, central government net debt increased over the first nine months of the current fiscal year by $290.8 million to total $11.1 billion.
At end of June 2022, the end of the previous fiscal year, the debt stock was equal to 87.3 percent of GDP, he noted.
However, at end of March 2023, the end of the third quarter of the current fiscal year, the debt stock equalled 83.5 percent of GDP, which represents a 4.4 percent decline from end of June 2022.
In the first nine months of the current fiscal year, public debt interest payments increased by $58 million to total $391.8 million, and amounted to 70 percent of the budget forecast.
In the current year, the overall deficit is expected to improve to $520.6 million, down from the $575.4 million outlined in the supplementary budget.
The government is seeking to borrow just over $45 million to offset budget shortfalls for the remainder of this fiscal year.
Davis said his government is committed to diligent and prudent financial management, and plans to use innovative financing methods through effective public-private partnerships.
“A key focus will be to generate more revenue for the public purse, without raising taxes,” the prime minister said.
“This means no increase in the VAT rate, and no increase in customs duties, excise duty, tax rates, and real property tax rates.
“We will instead increase revenue collection by improving tax compliance and enforcement. This is based on the simple principle of fairness. Most people pay their taxes. Why should some people be allowed not to?
“If people are experiencing hardship, or if there are other extenuating circumstances, we invite people to come and talk with us. We can usually come to some form of agreement.”
The prime minister also announced various initiatives – among them, funding for the Shantytown Action Task Force; funding to continue the development of a new health facility in Grand Bahama; a new hospital in New Providence, as well as continued improvement of the infrastructure for Family Island clinics; funding for a School for the Creative and Performing Arts; funding for the National Youth Guard Programme; the consolidation of National Health Insurance and the Prescription Drug Plan into an overall health policy, and funding to accelerate a rent-to-own program.