By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government spent 73 percent, or more than two-thirds, of the $60.275m allocated for its Budget Reserve Appropriation fund during the 2024-2025 fiscal year’s first-half, it was revealed yesterday.

Data released with the mid-year Budget showed some $29.387m was used to cover recurrent or fixed-cost spending during the six months to end-December 2024, while another $14.893, was employed for capital expenditure purposes for a combined total of $44.281m.

Of the recurrent sums, the greatest was $11.057m paid to the National Insurance Board (NIB) to cover costs associated with the National Prescription Drug plan. However, the use of other monies was somewhat vague, including more than $4m that was employed by the Prime Minister’s Office to cover “payment for supply of water” and another $861,980 needed for “settlement”.

Other payments made using Budget Reserve Appropriation funds included more than $827,000 that was needed to cover “climate change expenses for COP 29” in Baku, Azerbaijan. Elsewhere, some $150,000 was moved from other Budget line items and initiatives to cover travel expenses associated with the Government delegation’s attendance at the conference, taking the total outlay close to $1m.

Observers also suggested that the $1.026m paid for “development of solar energy services for the Government of The Bahamas” could have been the break-up fee paid to Burke Energy Services, the Florida company that sued for the payment only to abandon litigation when it was paid. The payment may have been approved before year-end 2024, but not issued until early 2025.

And questions were also raised as to whether the Government’s use of the Budget Reserve Appropriation complies with the Public Finance Management Act’s section 41, which stipulates that any monies must be used for an “unforeseen need for expenditure for which no provision or insufficient provision has been made”, and for which payment cannot be delayed. Several sources argued many payments should have been foreseen.

Elsewhere, the Government’s total arrears and unpaid invoices of $122.415m at end-December 2024 represented a 26.2 percent or $43.5m year-over-year decline compared to the same point in the 2023-2024 fiscal year.

Referring to these outstanding obligations, Philip Davis KC said yesterday: “At the end of the half-way point in the fiscal year, the Government’s obligations totaled $122.4m, which accounts for 3.4 percent of the expenditure budget, and the average Government arrears payment is less than one month.

“These obligations mainly comprised the following: $82.6m in invoices for recurrent expenditure; $9.9m and $4.8m in invoices for state-owned enterprises and capital expenditure, respectively; and $25m in arrears mainly for office rent.”

Meanwhile, the mid-year Budget also showed the Government is expanding its travel budget and spending by more than 25 percent, increasing this from $12.458m in the original 2024-2025 projections to $16.065m - a jump of some $3.607m - as it bids to reduce its borrowing costs by greater reliance on export credit guarantee financing and concessional loans from multilateral lenders like the Inter-American Development Bank (IDB).

“Our debt strategy also includes leveraging policy-based guarantees from multilateral institutions to reduce the cost of external financing,” Mr Davis said. “A part of our borrowing strategy will be greater use of export credit facilities, which are loan funding guaranteed by export credit agencies to fund the purchase of goods or services from the countries which provide those goods or services.

“The Government, through a guarantee provided by Altradius, the Dutch export credit agency, was able to finance the purchase of nine Royal Bahamas Defence Force vessels at concessional rates some 11 years ago. We are now proposing to finance the construction of a new Glass Window Bridge, through the use of a similar facility from the UK. This project would commence in the new fiscal period.”