Tuesday, May 15, 2018
By NATARIO McKENZIE
Tribune Business Reporter
The Deputy Prime Minister yesterday said the Fiscal Responsibility Bill will prevent a repeat of the 2017 pre-election spending splurge by requiring reporting to Parliament.
K P Turnquest said the legislation mandates a "Pre-Election Economic and Fiscal Update", to be given between 20-30 days before voters go to the polls, that will give Bahamians a new tool for government spending oversight.
"We want to ensure that we do not have the kind of ramp-up in spending that we saw in the last election. That is unsustainable and it is a tremendous burden on future governments and the Bahamian people," said Mr Turnquest.
"If we use the former administration as an example, it is clear why this provision is needed in the legislation. The former government's deficit in the year before the election was 5.8 per cent of GDP, almost double the deficit in the previous year.
"They projected the deficit at $100m and overshot this target by over $500m or 600 per cent. They managed to miss their budgetary estimates by over a half a billion dollars and this took place without the public having any idea of the state of the Government's finances."
Mr Turnquest said the Bill sets the deficit limit at 0.5 per cent of GDP, based on a comprehensive analysis performed by institutions such as the International Monetary Fund (IMF). "If the draft legislation were in place under the former administration, their deficit in the election year would have gone over the limit by 1,060 per cent," he added.
"By any measure, this demonstrated recklessness and a disregard for fiscal responsibility. Worse than that, the spike in this spending has created obligations on this government and the people of the Bahamas that will remain with the country for years to come."
The proposed law mandates that the Financial Secretary prepare and publish a pre-election economic and fiscal update 30 days before the election.
Mr Turnquest warned that all of this nation's fiscal woes cannot be remedied in one year. "Taking all of that into mind, the Budget will reflect our intention and we will see some deliberate adjustments to help us to stop the downward trend," he added.