IV. FISCAL PERFORMANCE IN 2014/15
AND 2015/16
Mr. Speaker,
I now turn to fiscal performance in the
2014/15 and 2015/16 fiscal years.
THE 2014/15 FISCAL YEAR
Mr. Speaker,
The fiscal outturn in the 2014/15 fiscal
year featured a somewhat more elevated
GFS Deficit than had originally been projected in the Budget Communication for
that year. The Deficit, at $381 million, was
some $95 million higher than the forecast
of $286 million. This was the result of a
number of factors, including:
• An increase in Recurrent Expenditure of
$100 million due primarily to a higher level
of Debt Redemption that year, to the tune
of $84 million, which I would note affects
the level of Recurrent Expenditure but not
the GFS Deficit;
• A further $14 million of the increase of
Recurrent Expenditure reflected a reconciliation exercise with BTC involving payments by the Government for services
received which were offset, on the Recurrent Revenue side, by the payment by BTC
of Business Licence fees and real property
tax and site rental payments;
• An increase in Capital Expenditure of
$41 million as a result of an acceleration
of the procurement project for new RBDF
vessels, with four vessels being completed
and delivered in the 2014/15 fiscal year, at
a cost of $66 million; and
• A lower level of Recurrent Revenue than
projected, by some $42 million, reflecting
the somewhat weaker than expected
growth in nominal GDP during the fiscal
year.
THE 2015/16 FISCAL YEAR
Mr. Speaker,
In the 2015/16 fiscal year, the GFS Deficit
is estimated at $150 million, broadly in line
with the Budget projection of $141 million.
This $9 million increase reflected a number of factors, including:
• A $57 million increase in Recurrent Expenditure primarily associated with higher
levels of expenditure in respect of both
Debt Redemption and Interest payments,
to the tune of $33 million and $35 million,
respectively;
• An additional allocation of $32 million
to the Ministry of Tourism for concession
payments under agreements with the
cruise ship companies, as was set out in
the Mid-Year Budget Statement;
• There were also the payments made by
the Government in respect of the CLICO
Bahamas liquidation, in the amount of $13
million, that were announced in the MidYear Budget Statement in early March of
this year;
• The Water and Sewerage Corporation
was allocated an additional $13 million to
cover shortfalls;
• Recurrent Revenue is expected to be
down by an estimated $37 million during
the fiscal year and this despite a significant
reduction in the level of nominal GDP as
compared to the Budget forecast, primarily reflecting the relative buoyancy of VAT
revenues; and
• Capital Expenditure during the 2015/16
fiscal is expected to be lower than projected, by some $52 million, partly reflecting
the timing of RBDF vessel deliveries.
As I mentioned at the outset of the Communication, the Government confronted
various fiscal pressures during the current
fiscal year, primarily in respect of Recurrent
Expenditure. But we were successful in
managing these pressures and containing
the increase in Total Recurrent Expenditure, net of Debt Redemption, such that
the rise in the GFS Deficit above the projected level was minimized to the extent
possible.
V. FISCAL POLICY 2016/17 AND BEYOND: THE MEDIUM-TERM FISCAL
CONSOLIDATION PLAN
Mr. Speaker,
As I stated earlier, the Government remains firmly committed to staying the
course with its Medium-Term Fiscal
Consolidation Plan. The plan comprises
a multi-year strategy whose overarching
objective is to secure durable structural
reform of the principal components of the
public finances. As such, we are moving
decisively to transform Recurrent Expenditure, Capital Expenditure and Recurrent
Revenue in a manner that is phased, measured and balanced.
Recurrent Revenue
Mr. Speaker,
The various reform and modernization
measures that we have implemented in
respect of Recurrent Revenue have borne
fruit and produced the targeted, significant increase in the revenue yield of our
tax system. From a low of 16.3 per cent
of GDP the year that we took office, the
revenue yield has risen to 22.5 per cent of
GDP this fiscal year. This primarily reflects
the impact of the Value Added Tax that
we implemented in January of 2015. Also
important have been the comprehensive
reform and modernization exercises that
we launched in our major revenue areas,
including Customs, Real Property Tax and
Business License. The further development of the new Central Revenue Administration will also contribute importantly to
revenue compliance and enhanced collections going forward.
The improved revenue yield of our tax
system that we have achieved during this
mandate has brought it into the range of
[9]
2016/2017
DRAFT
ESTIMATES
OF REVENUE &
EXPENDITURE