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Last Updated: Feb 13, 2017 - 1:45:37 AM |
 NASSAU, The Bahamas - Prime Minister and Minister of Finance the Rt. Hon. Perry Christie said in the House of Assembly, on May 25, 2016, that his Government remains "firmly committed" to staying the course with its Medium-Term Fiscal Consolidation Plan, a plan that comprises a multi-year strategy with the overarching objective to secure durable structural reform of the principal components of the public finances.
"As such, we are moving decisively to transform Recurrent Expenditure, Capital Expenditure and Recurrent Revenue in a manner that is phased, measured and balanced," Prime Minister Christie said during his
2016/2017 Budget Communication.
Prime Minister Christie added that the various reform and modernization measures implemented in respect of Recurrent Revenue have "borne fruit" and produced the targeted, significant increase in the revenue yield of the tax system.
"From a low of 16.3 per cent of GDP (gross domestic product) the year that we took office, the revenue yield has risen to 22.5 per cent of GDP this fiscal year," he said. "This primarily reflects the impact of the Value Added Tax that we implemented in January of 2015.
"Also important have been the comprehensive reform and modernization exercises that we launched in our major revenue areas, including Customs, Real Property Tax and Business License," Prime Minister Christie added. "The further development of the new Central Revenue Administration will also contribute importantly to revenue compliance and enhanced collections going forward."
The improved revenue yield of the tax system that his Government has achieved during that mandate, Prime Minister Christie noted, has brought it into the range of such yields among countries in the region, but he said he would stress that it still remains at the lower end of that range.
"With the ongoing revenue reforms that are in process and the further maturation of our VAT system, I expect the yield of our revenue system to improve again somewhat in the 2016/17 fiscal year, to a level of 23.7 per cent of GDP," he revealed. "In combination with the forecast growth in nominal GDP, that will result in estimated Recurrent Revenue collections of $2,176 million in 2016/17.
"The medium term projection assumes that the revenue yield will remain in the area of its 2016/17 level throughout 2018/19."
As for Recurrent Expenditure, Prime Minister Christie said he would reiterate that his Government is moving forward with the reforms and measures that are targeted at restraining the growth of spending and to make that spending more efficient and effective such that, through the medium term, Recurrent Expenditure shows a decline relative to the size of the economy.
"In the 2016/17 fiscal year, Recurrent Expenditure is estimated at $2,321 million, an increase of $166 million from its projected level this year," Prime Minister Christie said. "The bulk of that increase corresponds to a higher level of Debt Redemption payments, by some $102 million as compared to its level in 2015/16.
"However, I will stress again that the higher level of Debt Redemption will have no bearing on the GFS (Government Finance Statistics) Deficit in 2016/17. Going forward and, in line with the commitments contained in our Medium Term Fiscal Consolidation Plan, we are asserting that Recurrent Expenditure will be further constrained and projecting that it will decline as a percentage of GDP beyond the coming fiscal year, by one percentage point or more per year."
On the Capital Expenditure front, Prime Minister Christie said his Government is also remaining faithful to its commitment to restraining its weight relative to the size of the economy over the medium term, to a level in the range 2.5 per cent of GDP.
"In dollar terms, that amounts to a total level of Capital Expenditure of some $242 million per year," Prime Minister Christie said. "This constraint does not reflect a lack of commitment to modernizing and upgrading the public infrastructure in The Bahamas.
He added that, in this regard, his Government has provided significant new investments for National Security with funding to provide the Royal Bahamas Defence Force with three modern bases of operations throughout the archipelago. He noted, in addition, his Government has included funds to provide more vehicles and motorcycles for the RBDF, as well as agencies that operate in the Family Islands.
"We have also included funding to continue the very ambitious Family Island Road Programme, with road works in North Andros, Acklins and Abaco," Prime Minister Christie said. "In addition, we have included funding for the road paving programme in New Providence.
"Furthermore, funding is also available for Family Island airport development, as we continue to modernize the civil aviation regime in The Bahamas. This process, when completed, will see the present Civil Aviation Department as a standalone regulator, with the Airport Authority assuming operations for Family Island airports."
Prime Minister Christie pointed out that it is important for Bahamians to note that his Government completed an assessment of airports throughout The Bahamas in which it was indicated that recommended improvements could amount to $150 million.
"In consequence, we are in the process of completing major improvements to the airport in San Salvador and expect to engage in major improvements in Exuma, North Eleuthera, Berry Islands, Inagua, Cat Island and other airports as well," Prime Minister Christie said.
He added that the Government has also reached an agreement, in principle, to acquire new accommodations for the Post Office Department and this will pave the way for the complete renovation of the Post Office Building.
"Funding for the acquisition and outfitting of the new home of the Post Office is included in the budget," Prime Minister Christie said.
Prime Minister Christie said that as a consequence of the fiscal measures that his Government is implementing and, barring unforeseen developments, his Government expects to adhere to the fiscal objectives of the medium-term plan.
Among those objectives included, he said, the GFS Deficit will post a further decline in 2016/17 to a level of $100 million, or 1.1 per cent of GDP and the primary balance will post a second consecutive surplus in 2016/17, to the tune of $172 million. He added that on the current fiscal track, the GFS Deficit will be eliminated in 2018/19 and a small surplus will be posted.
"The ongoing rise of the Government Debt burden will be arrested and the ratio of Debt to GDP will decline to 64.1 per cent in 2016/17, down from the peak of 64.6 per cent in 2015/16," Prime Minister Christie stated. "It will fall steadily, thereafter, to stand in the area of 59 per cent in 2018/19."
© Copyright 2016 by thebahamasweekly.com
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