It gives me great pleasure to rise in my capacity as the Minister of Finance, to present the fiscal year 2022/23 Mid-Year Review of Fiscal Performance as required by the Fiscal Responsibility Act, 2018, and the Public Financial Management Act, 2021.
When we came into office in September 2021, the Bahamian people were suffering.
The country was still in the midst of the worst health crisis, and the worst economic crisis in living memory.
At the end of the summer of 2021, in the run-up to the General Election, the public finances were on the edge of a fiscal cliff.
Many sectors of the economy remained stifled by the hated Emergency Orders, despite many other countries having moved to eliminate such draconian measures. Earlier promises to end those Emergency Orders in The Bahamas had been broken; many Bahamians believed that the Competent Authority had no intention of relinquishing his special powers.
Public spending remained at unprecedentedly high levels, with little accountability or explanation of the methodology, process or value added to the Bahamian people.
Debt levels were increasing rapidly, with no end in sight to the borrowing.
And this after 4 years of an administration which borrowed more than a billion dollars for each year they were in office, without a single hospital, school, road, or airport to show for it, only a few sidewalks.
Upon coming into office, almost immediately my administration prepared and tabled in this Honourable House, a new or supplementary budget on October 27th, 2021.
This supplementary budget, entitled “Building the Foundation for a New Direction”, was the beginning of our promise to Recover, Rebuild and Revolutionize the economy.
It began the process of reform, and the adoption of a competent, compassionate approach to governance that prevails today.
To achieve this, the October 2021 Supplementary Budget:
- reprioritized unnecessary budgeted expenditure to areas where it was needed most;
- restored the fiscal health of the country over the medium term; and
- ensured that government could respond to the needs of the most vulnerable in society.
The 2021/22 mid-year review provided the first assessment of the impact of this administration’s policies to improve the lives of the Bahamian people.
Even in our early days, we could see the impact of change and reform:
We ended the curfew and lockdowns.
We eliminated the COVID-19 Emergency Orders.
We offered free masks and free testing.
We reduced the nominal rate of VAT from 12 percent to 10 percent.
We made a cost-of-living adjustment to pension payments for public servants, who have contributed so much to the development of this nation;
We resumed public service promotions, and payment of other benefits, and:
We fully re-opened the economy.
The previous government had in place a curfew that was strangling Bahamian businesses, a distance learning policy that left Bahamian schoolchildren out of their classrooms, and a health policy that left Bahamians gasping for oxygen in the hospital’s parking lot.
The pace of the recovery we set in motion was neither preordained nor inevitable; it was instead the result of deliberate policy choices we made swiftly and with conviction.
These initial reforms, the decisions we made at the very outset of our administration, put us in a position to maximize the benefit of a global rebound in economic activity, and allowed us to deliver tangible change for the Bahamian people.
Families were able to return to work with dignity and pride.
The pent-up demand in the travel and tourism industry was unleashed on the domestic economy.
And good governance was restored through fiscal reform and fiscal accountability.
The FY2022/23 budget presented in this Honourable House on Wednesday 25th May, 2022 under the theme of “The Way Forward”, presented a continuation of the comprehensive plan of reform and restoration of the Bahamian economy as outlined in our Blueprint for Change.
The contours of this same plan were articulated in the “Speech From the Throne” at the beginning of our term.
That budget was built around three central pillars:
Firstly, helping Bahamians to cope with the rapid increases in the cost of living;
Secondly, the creation and expansion of jobs and ownership opportunities for Bahamians;
And thirdly, addressing a variety of security concerns to make our communities and homes safer and our borders more secure.
The Way Forward budget was crafted at a time when the level of suffering in Bahamian households was at an all-time high.
Our prospects seemed bleak.
The Way Forward budget was designed to provide immediate relief to families and provide hope for the future.
Today, as we go through our assessment of progress at the mid-point of the fiscal year, I have a simple message for the Bahamian people.
Our policies are working.
We are heading in the right direction.
We are finally on the right path forward.
And even though there is still so much more yet to do, life in The Bahamas is better now than it was 17 months ago.
I will first provide an overview of the domestic and international macroeconomic context during the first half of the fiscal year, which has under-pinned the Government’s fiscal performance.
I will also provide an update on the Government’s outlook in respect of macroeconomic conditions for the remainder of the fiscal year, which provides context for our budget targets.
I will then report on Government’s fiscal performance over the first six months, given prevailing macroeconomic conditions.
Finally, I will provide an update on the status of the policy priorities articulated to the Bahamian people and planned policies for the remainder of the fiscal year.
2. REVIEW OF CURRENT & PROSPECTIVE MACROECONOMIC DEVELOPMENTS
- Current Developments
I now turn to a consideration of the most recent macroeconomic developments, and future prospects for the Bahamian economy.
As a Small Island Developing State, where a majority of the items consumed locally are sourced from other markets, it would be difficult to consider future prospects for the Bahamian economy without reference to the performance of the global markets.
In its January 2023 World Economic Outlook update, the International Monetary Fund (IMF) estimated that real output growth of the world economy in 2022 at 3.4 percent. This represents an increase from its October 2022 estimate, which was then forecast at 3.2 percent.
While this level of global growth represents an increase from the estimated 2.9 percent growth experienced in 2019, before the COVID-19 virus was declared a global pandemic, it still remains below the average real growth of 3.8 percent enjoyed in the previous twenty years.
At the global level, growth in 2022 was tempered by several factors. These include:-
- A global average inflation rate of 8.8 percent;
- Increases in benchmark interest rates at central banks around the globe to temper inflation;
- Continued supply chain shortages, including those stemming from the prolonged conflict in Ukraine; and
- The lingering impact of the COVID-19 virus on major countries, such as China, which continues to limit economic activity.
We are all well aware of the unique relationship which exists between the Bahamian and the United States (US) economies.
As a result of our reliance on the US for consumable goods, as well as being a primary source for tourist visitors, our economies are inextricably linked . In other words, macro-economic factors in the US will always have an impact in The Bahamas.
In 2022, the IMF estimated real output growth for the US economy at a modest 2.0 percent.
While the growth in nominal prices remained elevated during the second half of the year, inflation remain stubbornly high at 6.5% for the year to December 2022, in comparison to 7% for the previous period.
In an effort to tame rising prices, the US Federal Reserve increased its benchmark Federal Funds Rate by 275 basis points during the second half of the year. The Federal funds rate was 4.5 percent at end-December 2022.
On the labour front, the US labour market was characterized by shortages, in the wake of the normalization of labour conditions following on from the COVID-19-induced economic downturn.
Based on data from the US Department of Labour, as at the end of December 2022, US unemployment declined to a rate of 3.5 percent, which is equivalent to pre-pandemic levels.
As the single largest economy in the world, trends in US market performance are generally indicative of global market performance.
And so it is that we see that in the Euro Zone, as markets normalized, the annual inflation rate for December 2022 contracted to 9.2 percent, down from 10.1 percent in November 2022, and 10.6 percent in October.
The heightened economic activity experienced during the first half of the fiscal year persisted, with economic activity being supported by increased inflationary pressures, and increased output, owing to the post-COVID-19 economic rebound and supply chain shortages.
EU unemployment rates also declined to 6.6 percent in December 2022, down from 7.0 percent in December 2021.
Even though these global market trends have real-world effects on the Bahamian economy, the impact during the period was muted.
During the first six months of FY2022/2023, despite fluctuations in global markets,
the local economy sustained steady activity.
Inflation in the United States had little-to-no impact on demand for travel within the region, with stopover arrivals for the first six months of the fiscal year outpacing those of the same period of the prior year by 135.8 percent.
In total, there were 2.3 million additional visitors during the period, largely supported by a 2.1 million increase in cruise ship arrivals, which totalled 3.3 million.
Strong activity within the tourism sector had an important impact throughout the domestic economy, and led to record-breaking revenue in both the hotel sector, as well as the short-term home rental market.
Falling just short of pre-pandemic levels, arrivals in 2022 totalled approximately 7 million, an undeniable indicator of economic rebound over the year.
Likewise, hotel revenue during the first six months of fiscal year 2022/2023 exceeded pre-pandemic levels, owing to steady occupancy and higher nightly rates.
As market conditions improved over the period, so did the demand for labour across the economy, mainly to support the tourism sector.
On the monetary front, liquidity continues to expand.
However, poor access to credit by businesses remains a significant constraint on economic growth.
The uptick in domestic market conditions helped to support a $138.3 million (17.8 percent) contraction in private sector loan arrears, compared to the position in September 2021.
Banks weighted average loan rate firmed to 11.02% and, at the end of September 2022, the weighted average deposit rate was 0.52%.
The seasonal increase in demand for foreign currency contributed to a $36.2 million decline in external reserves to $3. 2 billion at the end of December 2022.
All told, Madam Speaker, while uncertainty can never be completely eliminated, all signs point to the economy and country finally moving in the right direction.
Businesses continue to grow, underdeveloped sectors are nourished, tourists are flocking to our shores, and the economy continues to rebound.
3. Prospective Developments
We are optimistic about the prospects for the domestic economy.
In its World Economic Outlook (WEO) update in January, as adverse risks moderate, the IMF adjusted its global growth projections upward from 0.2 percent to 2.9 percent in 2023, and to 3.1 percent in 2024.
New-found confidence in global growth is under-pinned by the termination of COVID-19 lockdowns, and the containment measures in China that limited economic activity and exasperated supply chain disruptions around the world.
The full re-opening of the Chinese economy in December 2022, is expected to lead to improved supply across sectors, as well as capture lost activity on a global scale. As a result, the IMF projects growth in China of 5.2 percent in 2023, and 4.5 percent in 2024.
As economies continue to adjust to inflationary pressures via Central Bank rate adjustments, growth is expected to temper slightly, slowing the full force rebound which had previously been expected. Despite the slowdown, growth is forecast to persist in advanced economies at 1.2 percent in 2023, and 1.4 percent in 2024.
Likewise, the IMF maintains a positive outlook for the Euro area, forecasting 2023 growth at 0.7 percent, and 2024 growth at 1.6 percent.
For The Bahamas’ major trading partner, the United States, the 2023 growth estimate rose by 0.4 percentage points, from 1.0 percent to 1.4 percent.
As a consequence of improvements in global market conditions, in October 2022 the IMF forecast that the rate of economic growth in The Bahamas would increase by 4.1 percent in 2023, and 3.0 percent in 2024.
While the IMF has not yet revised its forecast for domestic economic growth to take account of its latest global outlook, we remain confident that the upward momentum that we have witnessed to date, will largely be sustained.
Industry experts anticipate continued growth within the tourism sector. They remain confident that further opportunities will avail themselves through the remainder of the fiscal year.
In 2023, stopover arrivals are projected to exceed pre-pandemic levels, as the sector grows to meet continued demand for travel.
Based on current trends and advance bookings, as last year’s momentum carries over into this year, it is predicted that total visitor arrivals will exceed last year’s 7.0 million visitor arrivals by at least 20 percent.
This outlook is being supported by advance booking data, market intelligence and strategic marketing in major source markets.
On the whole, while the external economic environment still remains favorable, going forward it is clear that we will need to remain vigilant and prudent.
The outlook for macroeconomic performance is the same as articulated in the Government’s 2022 Fiscal Strategy Report, recently tabled in this House.
With broad-based foreign direct investment activity and targeted Government support in infrastructure, agriculture and small businesses, output growth for the remainder of the fiscal year is anticipated to comfortably achieve and even exceed the growth target of 3.0 percent.
REVISED SUPPLEMENTARY ESTIMATES
I would now speak briefly on the Supplementary Appropriation Budget. The supplementary appropriation budget would not be possible without the improved revenue performance experience by the Government. In the first six months of the fiscal year revenue exceeded projections by $79.4 million. In addition, the Department of Social Services identified $8 million of unused balances on its accounts at Bank of The Bahamas and Kanoo. These amounts were for previous years so they had to be transferred to the Consolidated Fund and account for as revenue.
In keeping with our conservative approach to managing our fiscal affairs we have only increase our revenue projections for the entire fiscal year by $53 million which includes the $8 million returned by Bank of The Bahamas and Kanoo. The net increase is $45 million which is only 56 % of the excess revenue received by the Government. In addition, we used the opportunity in the supplementary budget to make an accounting adjustment between excise tax (a tax on the local production of beers and cigarettes) and the excise duty (a tax on the importation of high value items such as cars, alcohol and cigarettes). On a related note Customs has not noticed any adverse reaction to the change in the excise tax regime from beers.
Persons would notice that the Supplementary Appropriation Bill would contain numbers which is different from the budget book. The explanation is easy, the supplementary budget is necessary because we choose to re-allocate the greatest extent possible to meet new obligations. Re-allocated amounts have already been appropriated by the Parliament. In some cases we have re-allocated between the recurrent and capital budget, hence the difference between the numbers in the Supplementary Appropriation Bill and the Supplementary Book which is being tabled.
4. FISCAL PERFORMANCE AT MID-YEAR 2022/23
I now turn to consideration of the fiscal performance for the first half of the fiscal year 2022/2023, starting with the provisional revenue estimates.
Revenue collections benefitted from improved visitor activity within the tourism sector, as economic conditions further improved to historical levels, and in some cases, surpassed pre-COVID levels.
The Government continues on its path to restore the country’s fiscal health, by implementing aggressive revenue strategies.
This will also provide a fiscal cushion for future, unforeseen, macroeconomic shocks.
For the first six months of the year, total revenue collections are estimated at $1.2 billion, which represents a $111.5 million increase over the same period of the prior year.
To date, revenue collections account for 44.5 percent of the annual budget target. This alone is indicative of the positive impact of the reforms implemented by this administration.
When we examine the first six months of FY2021/22, 43.4 percent of total revenue was collected during this period and only 35.3 percent of revenue was collected in the first half of FY2020/21.
Further, when we look at the last “normal” fiscal year of 2018/19, only 41.7 percent of revenue was collected during the first six months.
This policy shift is just one of the prudent strategies adopted by this administration to restore our fiscal health.
By improving revenue collection earlier in the fiscal year, we improve the cashflow.
And this reduces the need for short-term borrowings.
A further breakdown of the Revenue receipts reveals some key highlights:
- Tax revenue collections improved by $123.8 million and stood at $1.1 billion for the first six months of the fiscal year.
This represents 44.0 percent of the budget target.
- Value-Added Tax, which accounts for 54.8 percent of tax revenues, totalled $600.2 million and grew by $23.7 million, relative to the same period in the previous year. This equates to 42.5 percent of the annual budget target.
- With the sustained improvement in the tourism sector, departure tax collections totalled $71.5 million. and improved by $45.0 million relative to the previous year.
At the half-year mark, Departure tax accounts for 73.7 percent of the budget target.
Likewise, excise duties during the period improved to $120.0 million, a $38.3 million increase compared to the previous year. At the half-year mark, excise duties are at 74.3 percent of the budget target.
- Stamp tax collection increased to $57.8 million, an improvement of $41.4 million when compared to the previous year.
This makes up 72.6 percent of the total budget target at the half-year mark.
- In the non-tax revenue component, Honourable Members will recall that the Government had received a $24.5 million dividend from BTC in the previous year, the first in a long time, which inflated non-tax revenues in the previous year.
Now that revenues are stabilizing, the non-tax revenue totalled $152.7 million during the first half of this fiscal year.
- Total and Recurrent Expenditure
For the first six months of the year, total expenditure is estimated to be $1.5 billion, which represents an increase of $119.3 million over the previous year, for the same period. To date, total expenditure represents 45.6 percent of the annual budget target.
As for recurrent expenditure, preliminary estimates indicate an increase of $105.3 million to $1.4 billion, with key spending components including:
- An increase in compensation of employees by $42.2 million, to $399.4 million, and representing 47.2 percent of the budget target.
Increased spending in this component is explained by higher employment costs because of promotions, and other staff and salary adjustments during the period.
- Public debt interest payments increased by $41.1 million to $280.9 million and equated to 50.2 percent of the budget.
- Spending on the use of goods and services increased by $24.1 million to $274.5 million, and accounted for 43.2 percent of the annual budget target.
In line with the Government’s core functions in society, key expenditure during the period included:
- Increased spending on education, as outlined in the FY2022/23 Budget’s plans to invest in education and training.
For instance, during the period, transfers for scholarships and grants increased by 2.0 million and totalled $20.1 million; and subsidies to the University of The Bahamas increased by $1.1 million and totalled $15.5 million.
Because of the public’s reduced reliance on COVID-19 support, social assistance benefits receded by $36.9 million, and subsidies tightened by $5.6 million, particularly for the Public Hospital Authority.
In fact, direct COVID-related spending during the period significantly eased to $4.7 million, a contraction of $39.5 million relative to the same period in the previous year.
I note, however, that social assistance spending still represents a substantial increase over that of pre-pandemic years, in recognition of the enduring impact of the lockdowns on household income.
- Capital Expenditure
Capital expenditure for the first half of the fiscal year totalled $117.7 million, a $14.0 million increase over the same period in the previous year.
Capital expenditure amounted to 31.7 percent of the annual budget target.
Key investments during the period included:
- Investments in buildings other than dwellings, which amounted to $55.1 million, and represented an increase of $21.8 million over the previous year.
This spending component accounted for 67.0 percent of the budget target. The higher spending mainly reflects upgrades and maintenance of hospital and medical facilities, as well as Government buildings, especially educational institutions, along with further improvements to school grounds.
However, capital transfers declined by $6.1 million, as transfers to businesses impacted by the COVID-19 pandemic fell away.
- Borrowing and Deficit
During the period, The Government experienced a net deficit of $285.7 million, which represented an increase of $7.8 million compared to the previously comparable period.
At the half-way mark in this fiscal year, the deficit stood at 50.6 percent of the budget forecast.
As a result of net borrowing activities, central Government debt increased by $236.2 million to $11,036.0 million, which equated to 86.9 percent of GDP at the end of December 2022.
- Update on Arrears
Under the Fiscal Responsibility legislation, in addition to providing details to the general public on actual cash payments made for services rendered, we are also required to disclose the value of bills which are yet to be paid.
To be clear, Madam Speaker, these bills do not necessarily translate into new borrowings, as they have been provided for in the current budget, but instead because of differences in timing, have not as yet been settled.
Members will recall that in the mid-year review of the previous year, I revealed to the public that my administration inherited almost $1 billion in unpaid bills, claims and unfunded obligations.
Not only did we have debt levels of near 100% of GDP, but we also had a drawer filled with bills of almost $1 billion, waiting to be paid.
Again, Madam Speaker, I am happy to report that our plans and strategies are working, and that the era of fiscal mismanagement has come to an end.
I am pleased to report that at the halfway point in the fiscal year, the Government’s unpaid bills total a mere $90.7 million or 2.7% of budgeted expenditure, compared to the 31.3% reported in the previous year.
These bills include:
- $44.3 million in unpaid bills and other obligations for State Owned Enterprises, of which, $30.7 million in unpaid bills were to the Water and Sewerage Corporation for water purchased;
- $13.8 million in unpaid bills to the Ministry of Tourism, Investment, and Aviation, mainly for consultancy services, quality assurance, and global communications;
- $9.9 million in unpaid bills for catastrophic healthcare services and the upkeep of community clinics via the Ministry of Health and Wellness;
- $8.0 million in unpaid bills to Department of Transformation and Digitization in respect of various unfunded contractual obligations;
- $5.9 million to the Ministry of National Security for various security enhancement projects;
- $5.5 million to Bahamas Agricultural and Industrial Corporation mainly for insurance services and utility services.
- Update on VAT reduction and elimination of Zero-Rating
I’d like to take a few moments to report on another important initiative promised by our administration, and that is the structural reform in our VAT regime.
When we announced our intention to reduce the nominal rate of VAT from 12% to 10%, there was loud pushback from members opposite, along with a selection of
investors and creditors.
They all speculated on the negative consequences of such as policy, and issued dire warnings of a doomsday scenario if we implemented the cut in VAT.
It gives me great pleasure to announce to the House, that our strategy is working.
Our well-researched plan to reduce the nominal VAT rate from 12% to 10% is working.
As we predicted, the rate cut encouraged consumer spending, and provided desperately-needed relief to many thousands of Bahamians.
Despite the reduction in the nominal VAT rate from 12% to 10%, for the first six months of FY2022/23, revenue from VAT receipts GREW by $23.7 million to $600.2 million, compared to the same period in FY2021/22.
That’s right, Madam Speaker, exactly as said it would, we implemented a modest decrease in the VAT rate, consumer spending increased, and the revenue to the public purse went up.
It is still alarming to think that the nay-sayers opposite were running the public finances up until 17 months ago.
As reported in The Tribune Newspaper on March 10th, 2021, the Honourable Member for East Grand Bahama, the former Minister of Finance, claimed that our rate cut would destabilise the economy, and cost the Public Treasury some $100 million in revenue.
He was wrong.
Mr. Peter Turnquest, his predecessor in the revolving door of Ministers of Finance in the former administration, went further, and was reported in The Nassau Guardian on December 8th, 2021, as saying that “it is anticipated that [revenue losses] from that reduction in VAT from 12 percent to 10 percent can be as high as $200 million.”
He was also wrong.
And amid his criticism of our policy, the member for Killarney clearly forgot, or chose not to remember, how his administration’s shock imposition of a 60% increase in VAT in 2018, put a sharp brake on the country’s economic growth.
Madam Speaker, I’ll say now as I said back in 2021.
“This is what happens when you don’t understand basic economics. If you set consumption taxes too high, the economy slows down. These are the facts. This is the economic reality.”
And we were right!
5. CURRENT AND FUTURE POLICY INITIATIVES
On several occasions in this House, I have observed that national budgets reflect the government’s priorities and choices.
I do so because I want the Bahamian people to understand that the numbers in the budget are not just an accounting exercise, not a simple case of balancing the books.
Yes, we must be fiscally prudent and responsible, but we can also be compassionate and morally responsible.
We can use the resources of the Government to uplift the citizens and residents of the country.
And yes, while we must address short-term cyclical challenges, we can also invest in long-term national development.
The 2022/2023 budget was designed with all these objectives in mind.
And so we are content, but not complacent, with the achievements for the first six months of the current fiscal year.
But we are immensely proud of the various initiatives undertaken by the Government in the last six months, which have had or will have, as they are further developed, a tangible impact on the quality of life of ordinary Bahamians.
Global inflation has resulted in very unwelcome cost-of-living increases for Bahamians, just as it has for citizens in countries across the world.
I note here that we are addressing this very serious issue by taking steps in both the short and long-term. We have invested very substantially in agriculture because we absolutely must reduce our nation’s food import bill and our dependency on food grown or produced outside The Bahamas.
In the shorter term, we have attacked the problem in two ways: first by taking steps that encourage price reductions, and second, by increasing income.
In the budget, we announced wide-ranging reductions on customs duties on food items, and then, during the fiscal year, we announced the largest-ever increase in public sector wages in living memory.
All of this, Madam Speaker, was achieved within our targeted fiscal framework.
The increase in wages was achieved through signed agreements with the majority of unions in the public sector.
Negotiations with some unions are still ongoing, but they continue to be conducted with the seriousness and strong sense of purpose, which these kinds of discussions require.
This situation sits in stark contrast with our predecessors, who, during their time in government, managed to conclude negotiations with only one union.
No doubt a reflection of their choices and priorities.
In the face of this era of unprecedented price-uncertainty, we made the strong choice to invest in the infrastructure and resources applied to consumer protection.
We have added more staff, we have upgraded the office accommodation of the Price Inspectorate and Consumer Protection Staff, and, more importantly we have invested in technology.
This means that for the first time, price inspectors will be able to do digital inspections, and merchants will be able to make digital requests for adjustment in prices.
This will not only improve price transparency, but also result in lower costs for merchants, by reducing the time between ‘importation’ and ‘approval-to-sell’ a price-controlled product.
This Government came under sustained and unwarranted criticism for our efforts to assist and protect consumers through the expansion of items under price control.
We acknowledge that in a perfect market price controls are unnecessary.
But The Bahamas is not a perfect market.
Many of those who shout loudly about the virtues of the Free Market, themselves participate in monopolies, duopolies, oligopolies, and other non-competitive practices.
In all areas, the government has a critical role to play in protecting consumers from market abuse.
We will not flinch or shirk our responsibilities.
When we came into office in September 2021, face-to-face learning had not yet fully returned to schools.
The learning loss that resulted from lack of face-to-face learning, was harmful both to students, as well as to national development.
And so, Madam Speaker, we immediately moved to reinstitute face-to-face learning, in ways that were safe for both staff and students.
While we were very successful in doing so, we were shocked by the deplorable state of school premises, left behind by the former administration.
As a result, we embarked on a comprehensive school construction and repair programme.
This programme will continue into the next fiscal year, and involves the near-complete rebuilding of some campuses, as well as extensive renovations of others.
To fund this programme, we have to make adjustments in the budget allocations, and this partially explains the need for the supplementary budget funding of over $30 million for the Ministry of Education’s capital budget.
Madam Speaker I make the point again about choices and priorities.
It beggars belief how little care the previous administration placed on critical infrastructure, such as schools or healthcare facilities.
It is almost as if they believed that these facilities would never be used by Bahamians again!
These are examples of the very real activities undertaken by my Government in the first half of the fiscal year.
But that is only a snapshot of the work which has been done.
At the end of this Statement, I will table a new ‘Public Finance Management Bill’.
Once enacted, this Bill will repeal the ‘Fiscal Responsibility Act’ and the existing ‘Public Finance Management Act’.
The compendium of legislation which comprised the ‘Public Procurement Act’, the ‘Public Finance Management Act’, ‘Public Debt Management Act’ and the ‘Fiscal Responsibility Act’ reflected a government on autopilot.
None of the legislation reflects the situation which actually exists within The Bahamas, and their provisions severely hampered the legitimate operations of the Government.
This is yet again an example of the incompetence which preceded us.
There is no shame in borrowing ideas, concepts and even language in the drafting process.
However, those in leadership have the responsibility to ensure that what is being adopted, reflects the Bahamian reality.
That was not done, and so it was that in September 2021, the Ministry of Finance was not equipped to comply with the new legislation.
The required information systems were outdated or completely lacking.
Thankfully, in the 17 months in which we have been in office, the reality has changed, and the Ministry of Finance is now well on its way to achieve full compliance.
The Government has acquired and is now using, a best-in-class procurement software.
We are now able to provide the many reports required under the ‘Public Procurement Act’.
The Government has also acquired and will be implementing, a best-in-class financial information system, replacing two legacy systems.
For the first time, we are introducing true automation to our human resource systems.
Madam Speaker, this is a significant achievement, and we are proud to have led the way in making government finances more transparent and accountable.
I am happy to report that we have halted the constant downgrades by our external ratings agencies.
Last year, our bonds have been one of the top-performing bonds in Latin America and the Caribbean.
This accomplishment required not just a sound fiscal plan but a willingness to meet, and engage in active dialogue with banks, investors, and ratings agencies.
The Minister of Economic Affairs has met virtually or in-person, with hundreds of investors, talking in detail about our plans, and providing an unprecedented level of access to the Government.
This is a multi-faceted effort, and I remain thankful for the efforts and guidance of our external debt advisors, and the private sector debt advisory group.
Their comments and advice have assisted the Government greatly during this period.
Hard work, engagement, transparency, expertise manifest visible competence: this, Madam Speaker, this is how we have built confidence in our administration’s management of the Bahamian economy.
Underpinning all our efforts is our belief that we in The Bahamas, have not yet achieved our full economic and fiscal potential.
In this regard, we have made investments to encourage investments and improve our fiscal performance.
We believe it is important to make it easier for taxpayers to comply with their obligations.
Unlike a previous Minister of Finance, I am not going to brag about my power to take criminal action against those who cheat the exchequer.
I would prefer my actions to speak for themselves.
In this regard, the actions and results are clear.
Through engagement and negotiations with the clearing banks, we are seeing a steady increase in real property tax through a combined public information campaign.
In Customs, we are using technology which is helping us to reduce the errors which result in lost revenue.
To accomplish this, we will be providing free software tools to importers of goods, whether commercial or non-commercial importers.
I note that the electronic submission of customs documents was included in the original plan for the electronic single window, but unfortunately it was abandoned.
In respect of VAT and Business Licence the focus is on the taxpayer.
We have to offer a better service to taxpayers.
In this regard, we are launching initiatives for all types of taxpayers: large, medium, small and micro.
While it makes sense to allocate resources to initiatives which yield the highest return, all taxpayers deserve to be treated in an equitable way, and within defined timelines.
Our overriding philosophy is that taxpayers respond better to positive reinforcement, rather than negative harassment.
The Bahamian people fully understand that if we are to continue to build and improve our infrastructure, and provide the many services that citizens expect in the 21st century, then the running of the country needs to be funded through taxation.
And while nobody enjoys paying tax, most accept the need to do so.
We think that our job is to make that as simple, and as easy, and as affordable as possible.
As I observed at the beginning of this statement, we called our budget for this FY 2022/2023 ‘The Way Forward’.
It was built to provide immediate relief to families and provide hope for the future.
From this assessment of our progress in the year to date, it is clear that our policies are working.
We are finally on the right path forward.
And while we take comfort from knowing that things are working, we do not see this as a moment for celebration.
Instead we use it to spur us on, to remind us to stay focussed, and to continue working to deliver on the promises upon which we were elected.
There is much more to do, and, with God’s grace, we shall continue to do all that we can to make life better for the Bahamian people.
Thank you, and may God continue to bless us all!