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Last Updated: Feb 13, 2017 - 1:45:37 AM |
DNA: Fiscal Prudence and Balancing the Budget
By Brenda T. Harris, DNA Candidate for Bain & Grants Town, Spokesperson for Investments
Jun 9, 2016 - 6:56:25 PM
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 We in the DNA are of the opinion that there is no country in the world, including The Bahamas that can continuously consume more than it produces, spend more than it receives in revenue and borrow more than it can afford to pay back. Every year from 1973 to the present, successive Bahamian governments have achieved this dubious feat. What this means in economic terms is that we have never exported more than we have imported and thus, we have always had a trade deficit which ultimately has to be financed through increasing debt. This requires fiscal prudence to ensure a sustainable economy which requires the introduction of policies, procedures and a reform of the public services financial reporting methodology; a move from cash basis accounting to accrual basis account which will bring us in line with countries like Jamaica, Cayman Islands, Bermuda and Barbados who are already using the accrual basis of accounting in accordance with Generally Accepted Accounting Practices as specified by International Public Sector Accounting Standards issued by the International Federation of Accountants.
As per the President of Bahamas Institute of Chartered Accountants (BICA) stated in a press address on March 14, 2016, “A move to accrual basis accounting in public finances – a region wide push – is expected to lead to a better picture of results for a given period and a better picture of the financial position at any point in time through the reporting and recognition of assets and liabilities in a full balance sheet”. We in the DNA agree that this would provide for enhanced quality of information, consistency and transparency in public sector financial report. Also it would help with the timeliness, reliability and comparability. This will foster enhanced and robust policies, which will require the implementation of a risk-based approach to compliance, improved controls and monitoring to ensure public sector goals are achieved.
There was no mention of the release date of the concept paper on the conversion to accrual basis of accounting, that was promised by the Prime Minister in March 2016 and as communicated in the 2014/2015 Budget Debate. There was a brief mention of a new chart of accounts to be implemented in the next fiscal period. Question is, does this factor in the conversion to the accrual basis of accounting where each ministry is treated as a business segment responsible and accountable for the management of its own expenses and generation of revenue.
It is very important for us to have a more accurate reporting of the deficit incurred on an annual basis. This will assist with curtailing government spending, safeguarding the underestimation of liabilities and afford the ability for better planning and hence assisting to prepare balanced budgets. What this does is provide the country’s stakeholders inclusive of it citizens, creditors, foreign direct investors, rating agencies, regulatory and international bodies with a clearer picture of the country’s financial position, where they would be better able to assess the management and deployment of government resources. This would provide greater government transparency and accountability forobligations undertaken during their term in office. With the implementation of controls and monitoring over recurrent revenue and expenditure, the public sector would be in a better position to present a more accurate and reliable reporting and hence lend to decreasing the annual deficit.
Brenda T. Harris
DNA Candidate for Bain & Grants Town
DNA Spokesperson for Investments
© Copyright 2016 by thebahamasweekly.com
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