A key advisor to the Christie administration says the government will likely have to borrow an additional $150 million to service commitments not fully accounted for in the original budget.
James Smith, who is also a former state minister of finance, noted that the new government had "very little input" and insufficient time to craft a rock-hard assessment of spending. When the Progressive Liberal Party (PLP) won the May election, much of the budget had already been crafted and a number of debt obligations were on the books.
"There was no time," he said yesterday.
"After sitting in for a while, you begin to see things you wouldn't have known from the outside. One of those things was a number of projects in different stages in the pipeline that were not funded."
As an example, Smith referenced the expansion of the critical care block at Princess Margaret Hospital as a major liability to be reckoned with.
The project, initiated under the Ingraham administration, should eventually cost around $60 million to complete and another $50 million to outfit with medical equipment.
The PLP has also had to engage in special borrowing through the Inter-American Development Bank to fund the disastrous road works project. In addition, the government has introduced new programs such as the Mortgage Relief Plan and the Road Works Relief Plan, although these initiatives are expected to have a relatively modest impact on the public purse.
What it adds up to, in his estimation, is more borrowing to the tune of $100 million to $150 million.
That's in addition to the government's original $550 million deficit for the 2012-2013 fiscal year, which ends in July. The government also has a rising debt-to-GDP ratio of approximately 60 percent after including liabilities from public corporations, such as Bahamas Electricity Corporation, Water and Sewerage Corporation and Bahamasair.
"I think what has happened is when you have a change in government at that time, a full accounting didn't take place of the work in progress or commitments," Smith added.
The government is expected to make an announcement on the borrowing sometime in February when presenting the interim budget.
Earlier this month, State Minister of Finance Michael Halkitis said spending commitments and unforeseen circumstances will mean more borrowing, although he did not go into specifics at this time.
He did not respond to Smith's comments before press time.
"If we have to do anything additional, it will be because we have to pay for what they call prior commitments, things that have been purchased that there was no money for and anything unforeseen, like contingencies, things that come up," he told reporters. "But we'll get a full picture during the budget."
Late last year, Moody's downgraded the country's economic from A3 to Baa1. It was the second downgrade by the international rating's agency in as many years.
Analysis told Guardian Business from Wall Street that the most recent downgrade was not entirely the fault of the current government. While the PLP has inherited some difficult circumstances, Moody's also urged the government to move faster in achieving cost-cutting measures and bringing on new streams of revenue.

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