IN A BID to counteract the difficulties facing the Bahamian economy, the government said it will focus on more prudent fiscal management. During the annual general meeting of the Bahamas Institute of Chartered Accountants held at the British Colonial Hilton on Wednesday, Minister of State for Finance Michael Halkitis said the government will take a number of measures to achieve its goal of improving the economy. "Over the last five years, our GFS deficit averaged 3.1 per cent of GDP or $250 million," said Mr Halkitis. "If one-off revenue items, ie unexpected revenue windfalls, were excluded, this average would increase by at least $50 million per annum. So the deficit has been a chronic and persistent problem for this country." Mr Halkitis explained that although the Bahamas has enjoyed the highest per capita GDP of any independent state in the region and an exchange rate fixed, at parity, with the US dollar for more than 40 years, this position is under threat due to increased borrowing and elevated debt levels. He said currently, the government collects about 18 per cent of the country's gross domestic product (GDP) in revenue, which amounts to around $1.56 billion. The government, however, spends about 24 per cent of the GDP or $2.2 billion, resulting in a deficit of 6.5 per cent. "This deficit approximated our increase in national debt. When you consider that the economy is only projected to grow by 2.5 per cent in real terms, it is quite apparent that our debt burden in real terms is increasing on a per capita basis." Consequently, the government plans to put several measures in place in order to put the country's fiscal affairs in order. Mr Halkitis cautioned, however, that tax increases (if imposed without care) and dramatic cuts in expenditure, could "slip the country back into a recession". "So the approach taken has to be carefully considered, methodical and most of all, consistent as the gains may not be immediately large." To this end, the government will focus on reforming strategies already in existence, including revenue administration, expenditure management, debt control and modern methods for the purchase of goods and services. "Given the economic challenges we face, I would say that failure this time is certainly not an option," Mr Halkitis said.