MINISTER of Finance Peter Turnquest stressed the "historically high burden of government debt" as the new Free National Movement administration sets about the task of achieving economic stability and fulfilling campaign promises. In his first budget communication in the House of Assembly, Mr Turnquest said the outgoing-Christie administration oversaw the single largest run up of debt in the country's history...

MINISTER of Finance Peter Turnquest stressed the "historically high burden of government debt" as the new Free National Movement administration sets about the task of achieving economic stability and fulfilling campaign promises.

In his first budget communication in the House of Assembly, Mr Turnquest said the outgoing-Christie administration oversaw the single largest run up of debt in the country's history...

With only one month left before the current budget period closes, the fiscal deficit experienced a 21.9 percent increase for the first eight months when compared to the same period last year.
In its monthly economic report for April released yesterday, the Central Bank of The Bahamas (CBOB) pointed out that expenditure continued to outpace government revenue.
The regulator said the outturn of fiscal consolidation would continue to hinge on the success of "measures to strengthen revenue administration and contain expenditure growth".
Today, the new Free National Movement (FNM) administration will present the nation's fiscal state to date.
Meanwhile, the deficit for the eight-month period in review landed at $302.9 million, representing a $54.5 million increase.
Government spending increased by $85.1 million, which outstripped a $30.6 million gain in revenue.
The Central Bank explained that a $44.1 million advance in current spending mainly drove the growth in expenditure.
In addition, subsidies to Public Hospital Authority for the rollout of National Health Insurance (NHI) grew by 16.6 percent, a near $25 million increase.
Hurricane repairs underpinned a $61.6 million (51.7 percent) uptick in total capital expenditure.
While expenditure remained elevated, revenue
intake also went up.
Value-added tax (VAT) receipts were $417.5 million for the eight-month period.
"The expansion in aggregate revenue was driven by a $16.3 million (1.5 percent) broadening in tax receipts to $1,082.2 million," the report stated.
Import and export taxes also increased by $11.3 million and $7.3 million, respectively.
"Moreover, selective taxes on services firmed by $8.0 million (78.0 percent) to $18.3 million, owing largely to a $7.2 million timing-related increase in gaming tax receipts, while revenues from business and professional fees rose by $8.0 million (17.2 percent) to $54.7 million," the report added.
"In addition, receipts from stamp and departure taxes both moved higher by $6.8 million (10.3 percent) and $5.0 million (6.4 percent), respectively.
"Similarly, other miscellaneous taxes declined by $26.2 million (88.0 percent), solely reflecting the reduction in the unclassified taxes component."

Minister of Labour Dion Foulkes met with senior executives of the Bahamas Chamber of Commerce and Employers' Confederation (BCCEC) at his ministry on Thursday, May 25, 2017. Foulkes, who was joined by the permanent secretary in his ministry, David Davis, pledged the government's commitment to work with the Bahamas Chamber of Commerce and Employers' Confederation on national issues affecting the local business community.

Let's be honest.
The abhorrent actions of the former administration, more than anything else, secured for Dr. Hubert Minnis and the rehabilitated Free National Movement (FNM) a tremendous victory on May 10.
Voters we talked to did not vote for the FNM because they were impressed by the policy proposals articulated in the party's manifesto or during the various rallies.
They did not vote for the FNM because they were confident in Minnis' stated commitment to "rescue The Bahamas".
As is often the case in elections, they voted to remove an administration.
Many voters viewed the PLP as corrupt. It was for sure unaccountable and chaotic in its administration of the nation's affairs.
There was a widespread belief that another term of Perry Christie and the Progressive Liberal Party would have been disastrous for The Bahamas.
Now that Christie and the PLP have finally been toppled, and the Minnis administration's work has started in earnest, the loose talk of the campaign trail has given way to the realities of governance.
The music of the victory rally has long faded; the pretty hats from the opening of Parliament have been put away and the last of the Government House receptions ended a week ago.
With each passing day, the euphoria of the win will diminish.
The FNM's pledges are now coming into the spotlight.
The Minnis administration is now faced with the heavy task of prioritizing what it must do and how it will pay for its agenda, while attempting to stabilize the country's finances.
In opposition, Minnis pledged that, if elected, his administration would "repeal" value-added tax on breadbasket items as well as on all babies' and children's clothing, electricity, water, all heath coverage and insurance.
No one should look forward to these commitments being fulfilled anytime soon -- although Deputy Prime Minister and Minister of Finance Peter Turnquest insisted the Minnis administration is sticking by its pledges.
While Minnis repeatedly used the word "repeal" and "eliminate" prior to the election, the language in the recent Speech from the Throne was watered down.
In the speech, the new government says it will "take action to effect a reduction of VAT on breadbasket items".
There was no talk of repealing VAT on breadbasket items, and there was no mention of repealing or reducing VAT on all babies' and children's clothing, electricity, water, all health coverage and insurance.
Prior to the implementation of VAT in 2015, Minnis had warned that the "regressive" tax would "seriously impair the already weak, uncompetitive and struggling Bahamian economy and harm and diminish the quality of life of every Bahamian".
Around that same time, Zhivargo Laing, the former minister of state for finance, acknowledged that, had the FNM been reelected in 2012, it would have given the implementation of VAT "early consideration".
Now that Minnis and the FNM are in office, their VAT "repeal" pledge could come back to haunt them, if they fail to honor it within the first half of their term.
It is unrealistic to expect any announcement in today's budget communication about any repeal of VAT.
Given the short time the new administration has been in office, today's budget will really be the PLP's budget, save for elements that hint at the fulfillment of a campaign promise or two.
We are certain that the new government is not unmindful of the need to protect goodwill, maintain the people's trust and demonstrate to the electorate that it intends to do what it has pledged.
But no one should expect much.
One person close to the prime minister told National Review that the state of public finances is "much worse" than the FNM had ever imagined.
No kidding.
For sure, the FNM did not take into consideration what impact reducing or repealing VAT in certain areas would have.
Opposition parties are concerned with winning.
They deal with details when they get in the seat of power, one observer noted.
The FNM was at a great advantage in opposition, notwithstanding the crises that once engulfed the party.
The performance of the Christie administration was so shoddy and so ineffective that many people developed an "anything but Christie" attitude as the election neared.
The last administration damaged the trust early on. Despite the arrogance with which it operated, it learned that it is tremendously difficult to govern in an atmosphere where the trust is eroded.
Many Bahamians found it hard, if not impossible, to believe anything that Christie said.
When he finally went to Parliament in March to explain "where the VAT money gone", it was too late.
People had already made up their minds that Christie and the PLP had "pissed away the money" -- to borrow an unfortunate expression used by the then prime minister during one of his public meltdowns.
The FNM capitalized on the rapidly increasing angst toward the Christie administration.
It pledged to restore the health of public finances, while alleviating the tax burden on the poor.
The rubber has hit the road.

No room for excuses
Last week, Turnquest was unable to say how much of the more than $1 billion collected in VAT came from breadbasket items, or the other areas listed by the FNM for VAT repeal.
It is still early in the term, so we are not surprised that he cannot say when VAT will be repealed on electricity, breadbasket items, etc.
The further it gets into the term, the government will continue to face questions about this pledge if it goes unfulfilled.
The Minnis administration will find that it cannot back off from its promises using the excuse that it did not know how bad things were.
The Progressive Liberal Party (PLP) repeatedly used this explanation when we pressed it on its failure to fulfill the over-the-top, unrealistic promises it made on the campaign trail.
"We had no idea things were so bad," PLP ministers said over and over again.
In his budget communication after coming to office in May 2012, Christie said: "...Our room for maneuvre is, at least in the short-term, severely constrained by the dire fiscal situation that has been handed to us by the previous administration.
"The government's deficit and debt levels at this time are much worse than we had anticipated.
"We have been left with sizeable, ongoing capital expenditure commitments and a legacy of contracts entered into in the final days of the former administration."
Right out the gate, the Christie administration borrowed hundreds of millions of dollars.
During the budget debate in 2013, then Minister of State for Finance Michael Halkitis advised: "Our fiscal plan does call for us to borrow some $465 million in 2013/2014.
"While that is down from well over $500 million in 2012/2013, let there be no doubt that we are still not satisfied with that level of borrowing, and we remain fully committed to see a continued reduction in that amount from year to year as we grow the economy and increase revenue to the Public Treasury."
The Christie administration added more than $2 billion to the national debt.
The Central Bank reported that the fiscal deficit more than doubled before the passage of Hurricane Matthew and landed at $310.4 million at the end of the 2015/2016 fiscal year.
The new minister of finance, Turnquest, has already foreshadowed that the Minnis administration will have to undertake significant borrowing.
While this may be alarming to some, it is not surprising to people who have been paying attention to the state of the country's fiscal health -- but it is a chilling reality.
It is clear that the FNM had no plan to mitigate the revenue losses that would come from the granting of significant tax breaks.
Again, Turnquest is so far unable to say how much revenue the government would forgo if it were to fulfill this very significant and ambitious promise to repeal VAT on breadbasket items, all babies' and children's clothing, electricity, water, all heath coverage and insurance.
We imagine that the government would lose a substantial amount of revenue with these tax breaks.
Making promises in opposition is easy. The person who was up for the top job -- Minnis -- refused to make himself available for questions over these proposals.
Fulfilling promises in government, especially when the country's financial position is so strained, is another thing entirely.
We expect to hear Turnquest commit today to controlling expenditure and tightening revenue collections.
That commitment is in every budget communication.
There is a view that the former administration was wasteful in its spending.
It was also tremendously unaccountable.
We still do not know to date how much money was spent on the Bahamas Agriculture and Marine Science Institute (BAMSI) in North Andros, yet we were asked repeatedly by the former administration to recognize its wisdom in establishing the facility.
We still do not have a proper reporting on how the millions of dollars allocated to the Urban Renewal Programme was spent.
We have no accounting for expenditure on hurricane relief efforts.
The government borrowed $150 million after Hurricane Matthew last year. It collected large sums of money from corporate and other donors after that storm and the one the year before. There was also no accounting of those funds.
Minister of State for Finance Kwasi Thompson reported late last week that initial assessments of hurricane relief spending in Grand Bahama were "troubling".
The nearly $30 million spent on Bahamas Junkanoo Carnival is largely viewed as a waste of public money.
There are so many other areas of wastage we can point to.
The Ministry of Tourism poured $650,000 into the Caribbean Muzik Festival in 2015, but the festival was postponed and never rescheduled.
It spent $334,000 on shabby downtown holiday decorations last year. The decorations were more an eyesore than an inspiration for holiday cheer.
The former administration appeared to be wastefully spending money at a time when there was a desperate need to hold back expenditure.
While it will be operating from an inherited budget, the Minnis administration does have an opportunity to show right out the gate that it is being transparent and accountable, to show that it is, in fact, trying to put the books in order and to show that it is getting a handle on what was and was not spent or appropriated.
The new administration says it is determined to bail us out of the deep hole we are in.
It has also pledged to operate in a fully transparent manner.
It is, of course, easier to say than it is to do.
Solving this financial crisis is a very tall order.