FY2022 / 2023 BUDGET COMMUNICATION 9
Madam Speaker : Notwithstanding the risks , the outlook for a tourism-based economy such as ours remains encouraging .
This is especially because my government is proceeding with a strategy to address the harmful effects of the ongoing inflation pressures on consumers , and is taking proactive , decisive , and targeted steps to ensure a more durable and broadbased economic growth momentum in the fiscal year ahead .
Domestic economic activity is expected to maintain its growth momentum in 2022 , bolstered by the sustained recovery in tourism output , along with several varied-scale foreign investment projects in the Capital and Family Islands and by post hurricane rebuilding works .
However , the speed of the rebound in the tourism sector toward pre-COVID-19 levels remains reliant on the alleviation of all globally imposed travel restrictions and broadening of vaccination efforts across countries .
Madam Speaker : In other key economic indicators , monetary conditions in The Bahamas remain favourable , and support stability in our exchange rate .
At the same time , the subdued level of private-sector lending activity contributed to ongoing buoyancy in liquidity levels , and growth in external reserves .
With the relaxation of the COVID-19 restrictions , external sector developments featured a narrowing of the estimated current account deficit by $ 163.4 million ( 6.9 %), to $ 2,210.0 million .
This was because the services account reverted to a surplus position from a deficit in the previous year , owing to a recovery in tourism earnings .
In contrast , the capital account surplus returned to trend in 2021 , following a sharp rise in inflows in 2020 .
These were boosted by Hurricane Dorian re-insurance inflows , while the financial account inflows slowed because of a reduced level of public sector borrowings .
Madam Speaker : A further note on the current increasing trend in oil prices . Given the corresponding upward pressure on most goods and services that we consume , this is of significant concern to the government ,.
My government is committed to alleviating and addressing in a more sustainable manner , the firming trend in global prices , including the impact of higher fuel prices on electricity costs .
I will speak to these measures later in my communication . The Minister of Works will also elaborate on the plans of BPL ’ s
Board and management to secure greater operational efficiency .
This will be achieved , in part by leveraging independent power providers to bring to The Bahamas , generation powered by solar power or natural gas . Our commitment to energy reform and lowering the cost of electricity to Bahamians across the board is more than just talk . The Government shortly on coming to office appointed a Cabinet Energy Sub Committee that has been focused on advancing our commitment in the Blueprint for Change to transform to LNG powered generation . The Sub-Committee is advanced in discussions with providers to develop a LNG bunkering facility , LNG conversion of our generation and incorporating solar solutions .
It is expected that these initiatives will keep the long-term average cost of electricity below $ 0.20 a Kwh for The Bahamas — which is a 20 % reduction from the current levels . We look to have a definitive agreed framework this fiscal year to announce to the Bahamian people
4 . Fiscal Performance in FY2021 / 22
Madam Speaker : I now turn to an examination of the fiscal outlook for FY2021 / 22 , beginning with fiscal performance for the first nine months of the fiscal year .
These operational trends to-date provide the basis for our revenue and expenditure forecasts for the upcoming year , and over the medium term .
During the first nine months of FY2021 / 22 , total revenue increased by $ 617.6 million or 50.2 percent to $ 1,847.3 million , as compared to the previous year .
This largely reflected improvements in tax revenue of $ 526.4 million or 50.9 percent , and non-tax revenue increases of $ 90.9 million or 46.5 percent .
Key developments underlying revenue performance were as follows :
» Property Taxes increased by an estimated $ 9.8 million to $ 96.6 million
» Notwithstanding the reduction in the nominal rate of VAT from 12 percent to 10 percent in January 2022 , VAT receipts increased by $ 366.3 million or 78.0 percent to $ 836.1 million over the nine-month period » Excise taxes were estimated at $ 46.2 million » Gaming taxes improved by $ 21.0 million to total $ 37.5 million .
Taxes on international trade and transactions broadened by $ 183.5 million to $ 346.6 million and 83.1 percent of budget . The improved trade tax performance is largely explained by :
» Increases in customs and other import duty collections of $ 46.7 million to $ 180.9 million ; and