As published on ewnews.com, Thursday 17 November, 2022.
Prime Minister Philip Davis yesterday touted the lowest first-quarter deficit in more than a decade, though cautioned that while the economy is now heading in the right direction, “we must not lower our guard”.
Davis while delivering a contribution in the House of Assembly on the Ministry of Finance’s recently released Budget Performance Report for the First Quarter of the fiscal year 2022-2023 noted that total Revenues collected during the period amounted to $654.3 million, which is $57.8 million larger than in the previous the year.
Total recurrent expenditure contracted or reduced by $47.8 million, to close at $620.6 million, and capital expenditure contracted by $10.2 million, to total $54.2 million.
“This has resulted in a first-quarter deficit for 2022/2023 of $20.6 million. This deficit of $20.6 million is the lowest first-quarter deficit in more than 10 years. A New Day has dawned in our Bahamas.
“We have been able to achieve this by holding fast to our commitment to fiscal prudence, and implementing sound policies to stimulate the economy and generate revenue. We implemented the Economic Plan which was the bedrock of the decisive mandate upon which we were elected,” said Davis.
He further noted that during the first quarter, the Bahamian tourism sector continued to rebound, with, domestic economic activity rising to pre-COVID/pre-Hurricane Dorian levels.
“Year on year, the number of total stopover visitors remains strong as the Covid-19 Emergency Orders were lifted, and Covid-19 protocols eased. Many developments in the Family Islands were also continued,” said Davis.
Davis asserted that the country’s fiscal was dire and so bad that it prompted the previous administration to call an election some eight months early.
“All signs pointed to the fact that they were preparing to announce punishing tax rises, potentially having to call in the IMF to rescue the economy. Had we maintained the course of their plans to tax and cut, the economy would have been in disarray; or, as the Member for Killarney previously described their administration’s performance, the economy would have been in a wheelchair,” said Davis.
He argued that despite the continued impacts of the global cost-of-living crisis, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic all dampening global projections for 2022, growth in The Bahamas is estimated to remain positive at 3.2 percent, according to recent IMF publications.
“We have made the point many times, and now the results prove what we have been saying: by reducing the VAT rate from 12 percent to 10 percent in January, revenues collected increased, because people had more money in their pockets to spend, and each time they spend, VAT revenue improves. We would have thought that the simple logic of how VAT works had already been demonstrated back in 2018 when the previous administration imposed a sudden hike of a 60 percent increase in the VAT rate. This put an immediate brake on economic growth, and VAT revenues increased only marginally,” said Davis.
He noted that the country must remain prudent and disciplined.
“While the economy is now heading in the right direction, we must not lower our guard,” Davis said.
“World events remain unstable, and we have to remain vigilant in case there are other unforeseen, future shocks to the global economy.”