NASSAU, The Bahamas — During his Communication on the 2022/2023 Budget, in the House of Assembly, on May 25, 2022 Prime Minister and Minister of Finance the Hon. Philip Davis, spoke on the fiscal performance for FY2021/22, beginning with first nine months of that fiscal year.
Those operational trends to-date provided the basis for our revenue and expenditure forecasts for the upcoming year, and over the medium term, he added.
“During the first nine months of FY2021/22, total revenue increased by $617.6 million or percent to $1,847.3 million, as compared to the previous year,” Prime Minister Davis said.
“This largely reflected improvements in tax revenue of $526.4 million or 50.9 percent, and non-tax revenue increases of $90.9 million or 46.5 percent,” he added.
Prime Minister Davis pointed out that the key developments underlying revenue performance were as follows:
- • Property Taxes increased by an estimated $9.8 million to $96.6 million
- • Notwithstanding the reduction in the nominal rate of VAT from 12 percent to 10 percent in January 2022, VAT receipts increased by $366.3 million or 78.0 percent to $836.1 million over the nine-month period
- • Excise taxes were estimated at $46.2 million
- • Gaming taxes improved by $21.0 million to total $37.5 million.
“Taxes on international trade and transactions broadened by $183.5 million to $346.6 million and 83.1 percent of budget,” he said. “The improved trade tax performance is largely explained by increases in customs and other import duty collections of $46.7 million to $180.9 million; and Improvements in departure tax collections of $42.8 million to $48.7 million.”
Prime Minister Davis pointed out that revenue from the sale of goods and services rose by $58.7 million to $170.5 million. Increased revenue collections were attributed to increases in immigration related receipts of $43.6 million to $99.8 million; and Customs fee collections increased by $8.7 million to $36.9 million, and 61.5 percent of budget, he added.
Prime Minister Davis said that, during the nine-month period of the FY2021/2022, outlays for recurrent expenditure expanded by $80.7 million or 4.2 percent to total $2,021.5 million as compared to the same period in the prior year — representing 70.2 percent of the targeted spend.
“Compensation of employees increased by $24.4 million to $538.3 million largely owing to the resumption of promotions, staff reclassifications, payment of increments and other employee costs which were delayed in the past year,” he said.
“Spending on the use of goods and services widened by $21.8 million to $403.0 million, relative to the same period in the previous year,” Prime Minister Davis added.
He noted that rental costs rose by $7.0 million, driven by the payments of arrears to private sector landlords of $2.9 million, and to the National Insurance Board of $5.3 million.
“Spending on services were elevated by $34.1 million due to unbudgeted expenses related to the COVID-19 response, and outstanding health insurance premiums,” he said. “Conversely, finance charges contracted by $37.4 million to $15.4 million, primarily due to reduced outlays related to Government debt financing and foreign exchange hedging activities.
“Public debt interest payments widened by $69.7 million to $333.8 million; reflecting from the elevated levels of borrowing since the onset of the COVID-19 pandemic.”
Prime Minister Davis said that Government subsidies, which include transfers to Government-owned and/or controlled enterprises that provide commercial goods and services to the public, also increased by $21.3 million to $351.3 million.
“Subsidies to public non-financial corporations were higher by $25.3 million at $335.9 million, owing to the unwinding of certain COVID-19 support programs,” he noted.
“Pension and gratuity payments increased by $17.8 million to $120.9 million, and 70.9 percent of the budget, due to the government’s promised cost-of-living adjustment for pensioners, as outlined in the FY2021/22 Supplementary Budget.”
Prime Minister Davis said that, during the first nine months of the fiscal year, capital spending contracted by $7.8 million to $160.1 million, mainly reflecting the reduction in the extraordinary COVID-19- related support to small and medium sized businesses.
“Based on the revenue and expenditure activities, the overall fiscal position for the nine months to March 2022 recorded an estimated deficit of $334.3 million, which was $544.8 million below the same period of the year prior and only 38.9 percent of the forecast deficit,” he said.
“To finance operations, government net debt increased over the 9 months by $677.4 million, resulting in a total Direct Charge, or direct claims on government at
end-March 2022 of just over $10.5 billion, or 87.5 percent of GDP,” Prime Minister Davis added. “This represents a significant decline from the position at the end of June 2021, when the government’s debt was 101.0 percent of GDP.
“I’ll say that again: at the end of June 2021, debt were at 101 percent of GDP and now we are at 87.5 percent of GDP.”
Prime Minister Davis said that he was pleased to report that, based on current projections, his Government anticipated revenue collections for the full fiscal year to total $2,455.1 million.
“This equates to $208.6 million above the revenue targets established in June 2021,” he said. On the expenditure front, current trends suggest total recurrent expenditure will settle at an estimated $2,731.7 million, and capital expenditure at $230.6 million.”
