such yields among countries in the region,
but I would stress that it still remains at the
lower end of that range.
or more per year.
With the ongoing revenue reforms that
are in process and the further maturation of our VAT system, I expect the yield
of our revenue system to improve again
somewhat in the 2016/17 fiscal year, to a
level of 23.7 per cent of GDP. In combination with the forecast growth in nominal
GDP, that will result in estimated Recurrent Revenue collections of $2,176 million
in 2016/17. The medium term projection
assumes that the revenue yield will remain
in the area of its 2016/17 level through
2018/19.
Mr. Speaker,
On the Capital Expenditure front, we are
also remaining faithful to our commitment
to restraining its weight relative to the size
of the economy over the medium term, to
a level in the range 2.5 per cent of GDP. In
dollar terms, that amounts to a total level
of Capital Expenditure of some $242 million per year.
This constraint does not reflect a lack of
commitment to modernizing and upgrading the public infrastructure in The Bahamas. In this regard, as I mentioned earlier,
we have provided significant new investments for National Security with funding
to provide the RBDF with three modern
bases of operations throughout the archipelago. In addition, we have included funds
to provide more vehicles and motorcycles
for the Royal Bahamas Defence Force as
well as our agencies that operate in the
Family Islands.
RECURRENT EXPENDITURE
[10]
2016/2017
DRAFT
ESTIMATES
OF REVENUE &
EXPENDITURE
Mr. Speaker,
As for Recurrent Expenditure, I would reiterate that we are moving forward with
the reforms and measures that are targeted at restraining the growth of spending
and to make that spending more efficient
and effective such that, through the medium-term, Recurrent Expenditure shows a
decline relative to the size of the economy.
In the 2016/17 fiscal year, Recurrent Expenditure is estimated at $2,321 million, an
increase of $166 million from its projected
level this year. The bulk of that increase
corresponds to a higher level of Debt Redemption payments, by some $102 million
as compared to its level in 2015/16. However, I will stress again that the higher level
of Debt Redemption will have no bearing
on the GFS Deficit in 2016/17.
Going forward and, in line with the commitments contained in our Medium Tern
Fiscal Consolidation Plan, we are asserting
that Recurrent Expenditure will be further
constrained and projecting that it will decline as a percentage of GDP beyond the
coming fiscal year, by 1 percentage point
CAPITAL EXPENDITURE
We have also included funding to continue
the very ambitious Family Island Road Programme, with roadworks in North Andros,
Acklins and Abaco. In addition, we have
included funding for the road paving programme in New Providence.
Furthermore, funding is also available for
Family Island airport development as we
continue to modernize the civil aviation regime in The Bahamas. This process, when
completed, will see the present Civil Aviation Department as a standalone regulator
with the Airport Authority assuming operations for Family Island airports.
Mr. Speaker,
It is important for Bahamians to note that
my Government completed an assessment of airports throughout The Bahamas
in which it was indicated that recommend-
ed improvements could amount to $150
million.
In consequence, we are in the process of
completing major improvements to the
airport in San Salvador and expect to
engage in major improvements in Exuma,
North Eleuthera, Berry Islands, Inagua, Cat
Island and other airports as well.
The Government has also reached an
agreement in principle to acquire new
accommodations for the Post Office Department and this will pave the way for
the complete renovation of the Post Office Building. Funding for the acquisition
and outfitting of the new home of the Post
Office is included in the budget.
VI. PROJECTED FISCAL RESULTS
Mr. Speaker,
As a consequence of the fiscal measures
that we are implementing and, barring
unforeseen developments, we expect to
adhere to the fiscal objectives of our medium-term plan, namely:
• the GFS Deficit will post a further decline in 2016/17 to a level of $100 million,
or 1.1 per cent of GDP;
• the primary balance will post a second
consecutive surplus in 2016/17, to the
tune of $172 million;
• on the current fiscal track, the GFS Deficit will be eliminated in 2018/19 and a
small surplus will be posted;
• the ongoing rise of the Government
Debt burden will be arrested and the ratio
of Debt to GDP will decline to 64.1 per
cent in 2016/17, down from the peak of
64.6 per cent in 2015/16. It will fall steadily,
thereafter, to stand in the area of 59 per
cent in 2018/19.