Response to Government’s 2018 Fiscal Strategy Report
Chester Cooper, Exumas and Ragged Island MP, PLP Deputy Leader
November 25, 2018
In a fiscal year following a record deficit, with no national disaster impacting The Bahamas, and a massive, reckless, pain inducing tax increase, that the government still finds itself in the position of having overshot its own deficit projections by 33 percent would be laughable if the implications were not so serious.
We take little delight in telling this government ‘we told you so’; but we did tell them.
And no amount of pretty graphics will mask the fact that this government simply does not know what it’s doing.
The government’s deficit projection now stands at $415 million. As we said, a whopping 33% higher than initially projected for the 2017/2018 fiscal year.
The deficit is not substantially different from 2016/2017 when adjusted for the impact of Hurricane Matthew and the decision to adjust the basis to accelerate or bring forward payment of commitments, that could have been further amortized. The public would recall that the Government recklessly borrowed $722m of which they claimed $400m was to pay old bills. We remind the public that we said it was a politically vindictive and misguided attempt to inflate the deficit in that fiscal year. Unlike the PLPs last year in office there was no major hurricane.
The revenues fell short of budget by $110 million.
We projected this revenue shortfall, and urged the government to pay attention to it, including the revamping of the Revenue Enhancement Unit that was dismantled by this administration for no other reason than it was a PLP initiative.
We note an across the board under performance in most of the major categories of revenue. The deficit overshoot therefore cannot be reasonably attributed to one-off expenditure or non-recurrent expenditure such as natural disasters or payment arrears.
This report also confirmed that the government overspent its budget projections by $95 million.
One has to wonder how on earth, despite firing thousands of Bahamians to cut salary costs by $62 million, and starving capital works by spending $42 million less than budgeted, the government is still spending more than it said it would. Yet many small vendors across the country still complain that they can’t get paid.
The state of the country’s roads and public infrastructure, by the way, is reflective of this cut in capital expenditure.
What was the point? Despite an apparent strategy to make the grass look greener, the grass is dying, and the cattle have been nearly starved to extinction.
So, to recap the vagaries of the Fiscal Strategy Report, as a result of the government’s policy to raise taxes, fire Bahamians, raise taxes some more, and starve the public infrastructure, the government’s fiscal performance is still dismal.
To top it all off, electricity bills have sky-rocketed out of control, threatening the small business lifeblood of our communities, and the misery index on the ground continues to rise.
And despite all of the Government’s rhetoric, the national debt-to-GDP ratio has increased from 54.6% in 2016/2017 to 57.8% in 2017/2018 in its revised numbers.
This fiscal strategy report is simply political spin, draped with some fiscal numbers. We look forward to the formal mid-year budget report. However, we brace ourselves for the negative impact on the mid-year results of the Grand Lucayan acquisition.
The recent announcement of the spend of $3.5 million for upgrades is certainly only the beginning. Further, they have made a mess of business license processes, botched gaming taxes, and championed the underperforming collection of the increased VAT projections; all cause for concern.
There is nothing in this “fiscal strategy report” that inspires confidence. Producing pretty reports is not a strategy.
Just saying it is hoped that a Revenue Task Force will recoup tax leakages is not a strategy.
Arbitrarily raising the VAT exemption ceiling for BPL is not a strategy.
These are ad hoc, knee jerk measures.
We will say again, as we have done over and repeatedly, that the key economic strategy of the government ought to be growing the economy. They have no vision or plan to do so.
Our immediate recommendation is that the government should appoint an economic growth czar to focus on this all-important strategic objective.