By Fay Simmons

Tribune Business Reporter

jsimmons@tribunemedia.net

The Office of The Prime Minister in a statement yesterday said the Fiscal Responsibility Council’s Annual Budget report demonstrates the country is “moving in the right direction” and they will not be “distracted” while on the path of fiscal consolidation and continued growth.

While acknowledging the findings of the FRC report, the Davis administration said they are committed to reducing the debt to GDP ratio to 50 percent by fiscal year 2030/2031 and supporting growth and job creation.

“The government remains confident in the overall direction of its fiscal and economic strategy. We have charted a clear path to reduce the debt-to-GDP ratio to 50 percent by FY2030/31, while continuing to support growth, job creation, and targeted social investment,” said the statement.

“The council itself has confirmed that The Bahamas is broadly compliant with the Public Financial Management Act, 2023, and that our debt trajectory is on a downward course.

“The government is unapologetic in its commitment to ensuring that fiscal policy is not pursued as an end in itself but as a means to improve the daily lives of Bahamians. Decisions such as adjusting the VAT rate on essential items are designed to ease cost-of-living pressures on families at a time when inflation and global shocks remain very real concerns.”

While the FRC report acknowledged that both recurrent and capital expenditures through the first nine months were generally in line with the budget, it emphasised that the government must deliver a $96.6 m surplus in Q4 to meet its fiscal objectives. The council warned that potential underperformance in certain revenue categories could threaten the achievement of this goal.

The report also found the government failed to comply with two critical requirements: oversight of public enterprises and transparency around public-private partnerships.

While acknowledging these concerns, the Davis administration said their approach is “guided by realism and prudence” and maintained providing SOEs with capital investments will allow them to improve service delivery.

“The government recognises that the council has raised questions about revenue targets, expenditure ceilings, and the treatment of capital spending. Our approach is guided by realism and prudence,” said the statement.

“The decision to allow SOEs to undertake critical capital investments is not an attempt to obscure expenditure but to accelerate national development through entities best positioned to deliver sector-specific projects. The government will continue to improve reporting on these initiatives to ensure clarity and transparency.”

The Davis administration said they will be moving ahead with initiatives that provide long term savings and strengthen resilience including energy reform, pension for civil servants and the rationalisation of SOEs.

“We are also pressing ahead with structural reforms that will yield long-term savings and resilience. Pension reform for new public sector entrants will contain future liabilities, rationalisation of stateowned enterprises will reduce fiscal transfers, and reforms in energy and digital infrastructure will support both competitiveness and fiscal sustainability,” said the statement

“At the same time, annual contributions to the sinking fund, prudent borrowing strategies, and expanded access to concessional financing demonstrate that debt management remains a top priority.”

Noting that there is “still room for improvement”, the government maintained their fiscal strategy is “balanced” and “sustainable”.

“This administration will not be distracted from the work of fiscal consolidation and growth. The Council’s review underscores that The Bahamas is moving in the right direction. Our economy has demonstrated resilience in the face of hurricanes, global pandemics, and external shocks,” said the statement.

“We will stay the course, tightening expenditure where necessary, strengthening revenue collection, investing in people, and building buffers against risk. The government of The Bahamas is resolute. Our fiscal strategy is balanced, sustainable, and firmly focused on securing a stronger, more resilient future for our nation and our people.”