Reflections on The Bahamas Fiscal 2022/23 Budget Presentation
At the recently held Organization for Responsible Governance Pre-Budget Roundtable, Marla Dukharan, Caribbean Economist and Advisor noted that the country has gotten a number of important things right. The country has a clear set of fiscal goals for example Revenue-to-GDP and Debt-to-GDP. It has initiated a number of public financial management reforms starting with the last administration. There is improvement in the level of transparency and sharing information with the public. There has been focus on tax reforms to include enforcement and collections. She, however, questioned whether there was still enough runway to realize the benefits in the short-term and cautioned that growth should be role of the private sector and not government.
Gowon Bowe, CEO of Fidelity Group raised the issue that the budget should be seen as belonging to the country and not the government. The government should be in the business of facilitating and not doing. Minister Michael Halkitis readily agreed on multiple fronts that the need for growth, better communication with credit markets (domestic and international), that there is a need for realism in expectation while at the same time engendering confidence and optimism. He delineated what he considered to be clear objectives for this budget cycle - promoting growth, reducing fiscal deficit and debt and broadening the economic base.
In addition to the points outlined above, it is my view that the critical output from the presentation should be fundamental reforms in SOEs and civil services; updates on tax reforms and increased taxes, triggering the momentum to 25% revenue to GDP; structural impediments reforms especially in the area of energy; increase funding the social sector funding; strategy adjustments for health care and education; a clear delineation of growth strategies and initiatives spoken to by the minister; and very importantly, as debt is and will likely remain an uncomfortable Achilles heel to the way forward, adjustments to the debt management strategy.
These points when all taken together suggests an important path and a stance which could be value creating for the country. The 2022/23 budget presentation should firstly lay out a clear, reasonable, sober narrative directed at the lenders which charts a clear and bold path to increased credit worthiness. It should engender a national call to the private sector for greater innovation productivity, and growth engendering endeavours. There should be a clear message of the role all sectors are expected to play in executing the “budget of The Bahamas”. It should lay out a clear national proposition of effective facilitation and support and leverage policy adjustments to “incentivize” the national call. The presentation should re-confirm and extend the policy guardrails to secure transparency and accountability through public financial management reforms. And critically address the potential need for greater social support in response to the current high inflationary environment.
Due mainly to the debt stock and the effects of the pandemic, this budget might be the single most important in the life of the country. It must therefore pave the path and lengthen the runway to the future by taking positions which allows for recent changes to effectively mature while laying the foundation and establishing the initiatives that will crystalize in the long term. As an underlying principle it must be clinically concentrated on the decisions to be taken today that will lead to a stronger, better more sustainable and resilient tomorrow.
Hubert Edwards is the Principal of Next Level Solutions Limited (NLS), a management consultancy firm. He can be reached at email@example.com. Hubert specializes in governance, risk and compliance (GRC), Accounting and Finance. NLS provides services in the areas of enterprise risk management, internal audit and policy and procedures development, regulatory consulting, anti-money laundering, accounting and strategic planning. He also chairs the Organization for Responsible Governance’s (ORG) Economic Development Committee. This and other articles are available at www.nlsolutionsbahamas.com.