By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Fiscal Responsibility legislation must “make it extremely difficult” for the Government to exceed Budget spending forecasts, an outspoken businessman yesterday demanding that any increase require at least 80 per cent Parliamentary approval.

Dionisio D’Aguilar, the former Bahamas Chamber of Commerce president, told Tribune Business that there needed to be “defined limits” and ‘caps’ on government borrowing and spending that were hard to remove.

Speaking after the Government increased its 2015-2016 full-year spending forecast by $62.5 million in the mid-year Budget, Mr D’Aguilar told this newspaper that such impositions were the only way to “drive” Fiscal Responsibility into being in the Bahamas.

He added that the increased estimates “absolutely” supported calls for this nation to enact Fiscal Responsibility legislation, which has been urged by the likes of the Coalition for Responsible Taxation, and now the Organisation for Responsible Governance (ORG).

“Fiscal responsibility should not simply be coming to Parliament to get permission [to spend and borrow more money],” Mr D’Aguilar said. “They should make it a lot more difficult than that.

“You need ceiling limits, and any time you want to increase the ceiling, 80 per cent of Parliament should approve it. If you intend to increase the cap, get the unanimous or near-unanimous consent of Parliament.

“It shouldn’t be easy; they have to involve the Opposition. There should be defined limits on borrowing. If you limit the borrowing, you drive Fiscal Responsibility.”

The Government has shown a marked reluctance to engage the private sector over its demands for Fiscal Responsibility-type legislation, and greater transparency and accountability for how taxpayer monies are used.

Prime Minister Perry Christie’s 2015 mid-year Budget pledge to hold a public consultation on Fiscal Responsibility-type laws, via the issuance of a policy paper, with recommendations submitted to government by year-end, has yet to materialise more than 12 months on.

Such legislation would bolster Government transparency and accountability for how the public finances are managed, requiring it to return to Parliament and obtain approval for any extra spending over what was approved in the Budget.

Many in the private sector view Fiscal Responsibility legislation as the Government’s side of the ‘fiscal bargain’, which needs to be implemented in return for the private sector agreeing to Value-Added Tax’s (VAT) implementation.

Mr D’Aguilar alluded to this yesterday, telling Tribune Business: “The purpose of the VAT monies was to reduce the deficit. They’re trying to wiggle out of their side of the deal, and are really taking the country to the edge by not living up to their side of the bargain.

“They’re not growing the economy or reducing unemployment. The only thing saving us from a downgrade is that we have promised to reduce the deficit to $141 million.

“The Government are playing with fire. They’ve got to stop frittering away the people’s money. If you have no ideas to grow the economy, you’ve got to keep expenditure in check.”

Calling for increased fiscal discipline by the Christie administration, Mr D’Aguilar expressed concern that the Government would use its VAT ‘windfall’ to finance increased spending on social programmes, taking the Bahamas into a ‘spiral’ of increased ‘tax and spend’ policies.

He added that an election year was also rapidly approaching, increasing the temptation for the Government to increase its spending as part of a re-election bid.

While net revenues increased by $217 million for the Government’s fiscal year first half, its recurrent (fixed cost) spending rose by $200 million year-over-year during the same period. This meant that the ‘primary deficit’ fell by just $17 million year-over-year, from $197 million to $180 million.

Michael Halkitis, minister of state for finance, said the recurrent spending rise was due to items being switched to that account from the capital Budget - a move that was flagged last May.

However, accounting for the $53 million drop in capital spending, the Government’s total spending was still up by $147 million for the six months to end-December 31, 2015.

This led to the Government exceeding its projected full-year fiscal deficit of $141 million by $16 million after the first six months, although Mr Halkitis said it remained ‘optimistic’ about closing the gap due to the bulk of revenues coming in during the second half.

“The vast majority of the Bahamian people don’t give a hoot, and the politicians take advantage of that,” Mr D’Aguilar told Tribune Business.

“If no one cares, and we borrow, borrow, borrow, that’s what got us into this $6.5 billion debt. There’s nothing to get anyone excited about this economy apart from reducing the deficit to $141 million.”

He added: “One wants to believe them [the Government] that they’re trying to do better, but when you look at something like a $62.5 million increase and they do not point it out and explain it...... tell people what you’re doing.

“It’s important that we all know what is happening. Prepare us for what you are doing, and if you’re heading to the precipice, pull us back. Act responsibly and don’t try to hide it from us.

“If you mismanage the economy, it will come back and destroy us. We gave them $350 million in extra taxes to eliminate the deficit. For once in your life, live up to your word.”