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Last Updated: Feb 13, 2017 - 1:45:37 AM |
 Communication by
The Rt. Hon. Perry G. Christie Prime Minister And
Minister Of Finance Debate On The
2016/2017 Budget
Closing Statement
Wednesday, 22nd June 2016:
Introduction
Mr. Speaker:
In closing the debate on the 2016/17 Budget Communication, I am drawn to remark that the quality and constructiveness of the contributions that have been offered by Members of the Opposition are fully consistent with what we have heard from them in recent years.
These contributions are consistently confused, disjointed or simply and blatantly erroneous.
Indeed, theirs is a litany of feeble laments, strung together, one after the other, in no coherent fashion. What is truly lamentable is that one’s mind can be so disjointed. But I suppose that this merely and fundamentally reflects the Opposition’s approach to governance. Based on their performance in their last term in office, it is clear that they have no guiding coherent vision for the future, nor concrete plans for achieving better economic and social outcomes for Bahamian citizens.
Instead, they floundered about rather than exercise rigorous and disciplined husbandry of the public finances. It bears repeating that, during their recent mandate, they succeeded in producing the most astounding and explosive increase in the public debt burden in any five-year period in the history of our nation.
Mr. Speaker:
When we left office in 2007, we left them with a debt-to-GDP ratio of 30 per cent, generally acknowledged to be a desirable and sustainable level. Mr. Speaker, I think it would be useful to pause here for a moment to explain why it is important to look at Government Debt relative to GDP, or alternatively, the size of the economy. That is because the size of the economy essentially reflects the ability of Government to service its debt in terms of its ability to collect revenues. It is really similar to borrowers in the private sector where one looks at debt service ratios, or debt relative to income. In assessing the creditworthiness of borrowers, lenders will look at such ratios as a measure of the ability of borrowers to meet their debt servicing obligations. So, in the area of the public finances, we look at Government Debt to GDP ratios.
To continue, then, when we returned to power in 2012, we inherited their dismal fiscal structure with a debt-to-GDP ratio that then stood at 55.4 per cent of GDP in 2012/13.
The burden of debt rose by fully 25.4 percentage points on their watch, from the base of 30 per cent that we had left them; that is an astonishing 85 per cent increase in the burden of Government debt.
In marked contrast, in our current mandate, the ratio of debt-to-GDP will, by the end of the 2016/17 fiscal year, have risen by a more modest 8.7 percentage points, to a level of 64.1 per cent. That’s an increase of 15.7 per cent over the course of our mandate, as compared to 85 per cent during theirs.
Mr. Speaker:
I also want to emphasize at this juncture that the data to which I have been referring relates to the Direct Charge on Government. The reason that we focus on that measure of Debt in the Budget Communication is that it is the one that relates directly to the GFS Deficit. By and large, the change in the Direct Charge every fiscal year amounts to the size of the GFS Deficit during that year.
The Government does, of course, also guarantee the borrowings of certain public bodies and those guarantees represent contingent liabilities of the Government. When these are added to the Direct Charge, one then gets the Total National Debt. The size of the Government Guaranteed Debt is relatively small in comparison to the Direct Charge and it has not varied greatly over the years. In 2007, it amounted to 5 per cent of GDP; in 2012, 7 per cent and, at the end of 2015, 8.5 per cent. I would note that both measures of Government Debt are clearly shown in the Tables that accompany the Budget Communication.
As such, whether one is looking at the Direct Charge or at the National Debt, the message is the same: Government Debt during our current mandate has risen by far less than it did during the last mandate of our predecessors.
And, more importantly, Mr. Speaker, our fiscal actions have set the table for the seemingly inexorable rise in the burden of public debt to finally be arrested and for the debt-to-GDP ratio to begin falling as of the 2016/17 fiscal year.
Mr. Speaker:
This brief introduction sets the overall tone for my contribution to the debate today. More specifically, I will address the following central themes as they relate to the 2016/17 Budget Communication:
- our track record in respect of fiscal responsibility in the context of our agenda for a modern Bahamas;
- our fiscal achievements since 2012 and, in the process, I will correct some of the glaring inaccuracies in Opposition statements made during the debate;
- our plan for renewed and more vigorous growth of the economy and job creation; and
- within that context, our successes in promoting and supporting new investments across the breadth of the nation.
Fiscal Responsibility
Mr. Speaker:
I begin with the matter of fiscal responsibility.
When our mandate began four years ago, we were poised to implement the bold and proactive transformative agenda, set out in our Charter for Governance, that was specifically designed to address the very grave and deep- rooted economic and social problems plaguing our country...
Full
Prime Minister Christie Debate on The
2016/2017 Budget
attached below
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