Wednesday, June 12, 2024
By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
THE Government yesterday unveiled a $36.2m fiscal surplus for April 2024 after a 29.7 percent year-over-year revenue increase outpaced a $50.3m jump in spending.
The Ministry of Finance’s latest monthly report reflected a lower total revenue figure, at $359.4m, than that given for April by Prime Minister Philip Davis KC in his recent Budget communication. If the $385.8m he cited is the true number then the Government’s surplus could come in some $26.4m higher at $66.4m.
“The preliminary total revenue for April 2024 is estimated to be $385.8m, reflecting a significant increase of $108.6m or 39.2 per- cent compared to April in the previous year,” Mr Davis said. However, the $359.4m number still represented an $82.2m year-over-year revenue surge even though its was just $1.3m higher than March’s intake.
“For the month of April, the Government’s fiscal operations yielded an appreciably higher surplus of $36.2m compared with $4.2m in the corresponding month of the prior year,” the Ministry of Finance said.
“Developments underlying this outcome were a year-over-year improvement in revenue receipts by 29.7 percent ($82.3m) to $359.4m, which outpaced the 18.4 percent ($50.3m) expansion in total expenditure to $323.2m.” The Government’s direct debt also declined by $50m during the month.
April’s surplus, which measures by how much the Government’s revenues exceeded its spending for the month, when combined with the prior month’s $83.5m and February’s more modest $6.9m surplus has created a $126.6m Budget boost that has brought the fiscal deficit down from an end-January 2024 high of just over $300m.
The deficit for the first ten months of the 2023-2024 fiscal year stands at $177.9m at end-April, giving the Davis administration a chance of hitting its revised full-year forecast of $210m - at the top of its $146m-$216m guidance range - provided it can contain the ‘red ink’ typically incurred during the final two months of every Budget cycle.
The Government will need to contain the combined deficit for May and June to less than $40m. The Prime Minister acknowledged that this will require strict spending containment and management, especially since Santander, the global bank, noted that June deficits alone have averaged $180m for the past ten years.
Former Ministry of Finance insiders have told Tribune Business that successive administrations, both PLP and FNM, have found it impossible to break this trend. If repeated, this would likely push the Government’s deficit into the $300m-$350m range.
“Tax collections, at $338.8m, posted a strong upturn of 30.5 percent ($79.2m),” the Ministry of Finance said of April’s performance. “VAT receipts increased by $27.1m to $154.4m, benefiting from the positive impact of recent tax administrative enhancements and enforcement measures on realty-related transactions, alongside gains in the goods and services component given the continuation of positive domestic demand.
“Other taxes on goods and services improved by $36.6m to $79.1m, largely on account of the recent changes positively impacting the dominant Business License fee component. Property taxes were higher by $9.7m at $28.8m. International trade and transactions taxes rose by $5.7m to $75.7m.”
Elsewhere, the Ministry of Finance added: “Non- tax revenue posted a gain of 17.3 percent ($3.1m) to $20.7m. Fees from the sale of goods and services, predominantly from Immi- gration and Custom related activities, rose by $2.9m to $19.7m. Other non-tax receipts posted a moderate gain of $0.1m to $1m.”
Several sources suggested the spending increase for April reflected the Government using its extra revenue income to pay outstanding bills. “Recurrent outlays for the review month firmed year-over-year by 19.5 percent ($49.1m) to $301.4m,” the Ministry of Finance said.
“Public debt interest payments grew by $14.9m to $85.4m, mainly on account of recent overseas rate hikes and a higher debt stock. Personal emoluments were up by $4.6m to $70.7m. Approximately $48.5m was expended on the use of goods and services with the $12.7m gainpartly due to timing variations in payments.
“Subsidies were relatively stable at $37.9m, while social assistance and pension payments firmed by $9.3m to $27.6m inclusive of the impact of earlier policy related changes. Other payments, which cover support for both households and public enterprises as well as insurance premiums, aggregated $31.4m for a gain of $7.8m.”
On the capital spending side, the Ministry of Finance added: “Capital expenditures increased by 5.6 percent ($1.2m) to $21.8m. Approximately $18.9m (86.9 percent) represented investments in various infrastructure and the remaining $2.9m (13.1 percent) was by way of capital transfers.”
As for the Government’s debt position, the Ministry of Finance added: “During April, central government’s financing operations resulted in a decline of $50.3m in the outstanding debt. Proceeds from borrowings totalled $215.8m denominated in Bahamian dollars only, comprising of Bahamas registered bonds and Central Bank advances.
“Repayments totalled $266.1m owing to repayments of government securities in Bahamian dollars (92.4 percent) and international financial institutions and investment banks in foreign currency (7.6 percent).”
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