A combination of higher revenue collection and lower expenditure caused the government's overall deficit to contract by $66.2 million, or 45.9 percent, in the first quarter of the 2013/2014 fiscal year - a turnaround from a $49.4 million, or 50 percent growth in the deficit during the same period last year.
The Central Bank of The Bahamas has attributed the change to a combination of higher revenue collection and reduced expenditure.
The turnaround comes as many in the private sector are calling for the government to show evidence of its commitment to reducing government spending as a means of addressing the deficit and debt.
John Rolle, financial secretary, said the figures must be considered in context, with the timing of certain financial flows likely to have made the percentages appear more "drastic" than otherwise.
However, he said the picture presented fits with some of the "direct concerted efforts of the government to manage its expenses" and to improve revenue collections.
Gowon Bowe, co-chair of the Coalition for Responsible Taxation, said he would be happy if these types of reductions in the deficit were "sustained" over "at least two consecutive quarters".
"That's not to disparage the results; they are positive. But the question is whether this is a sustained change in the path.
"Another key point is that timing can be a great distorter of information. We need to look at the full year to really see what is going on.
"And if you get to the accrual basis of accounting, the question is what are the unrecorded liabilities and commitments, which may push those numbers into complete disarray if you were to add them on top."
According to The Central Bank of The Bahamas, revenue collection grew by $8.5 million, or 2.9 percent, to $305.3 million in the first quarter of the 2013/2014 fiscal year. Non-tax receipts drove the revenue growth, being up $9.4 million, primarily due to a $9.5 million rise in fines, forfeits and administrative fees - a 46.7 percent rise.
In contrast, tax collections contracted marginally by $0.9 million (0.3 percent) to $271.7 million, led by a $15.2 million (9.9 percent) decline in taxes on international trade, which offset the almost two-fold increase in other "non-allocated" taxes to $28.4 million.
On the expenditure side, overall spending in the quarter fell by $57.8 million, or 13.1 percent, to $383.3 million. Recurrent outlays decreased by $27.5 million, or 7.5 percent, to $342.1 million, reflecting in part a decrease in subsidies to a local public health authority.
This can be compared to the same period last year when recurrent outlays rose by $24.0 million (seven percent) to $369.6 million, led by an $11.8 million rise in personal emoluments, along with an $8.3 million (6.5 percent) gain in transfer payments.
Capital outlays dropped by $32.1 million (51.5 percent) to $30.2 million in comparison to the same quarter in the previous year, in line with a reduced level of infrastructural projects. This represented a significant turnaround from activity in 2012, when capital expenditure more than doubled to $62.3 million from $25.7 million, linked to increases in outlays for infrastructure projects.
Government's budgetary support to public entities grew by a net of $1.9 million (20.2 percent) to $11.1 million over the same period last year.
"In the context of challenging global conditions, expectations are that the domestic economy will continue to face significant headwinds over the near-term. No significant improvement is anticipated in employment conditions until the economic recovery broadens to other key sectors, while inflationary pressures are likely to remain subdued, despite the volatility in global oil prices," said the central bank.
"Improvements in the fiscal deficit and associated debt indicators remain heavily dependent on the extent of the domestic recovery, as well as the success of government's efforts to increase revenues through enhancements in administration and the implementation of new tax measures, while also restraining expenditure growth," it added.

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