By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition last night demanded the Prime Minister explain “the glaring discrepancy” between the $135.4m Budget surplus he projected for April 2025 and the actual $2.1m deficit outcome.

Kwasi Thompson, the Opposition’s finance spokesman, told Tribune Business that the $137.6m negative swing that was revealed yesterday - less than two months after the Prime Minister detailed a rosy April outlook in his 2025-2026 Budget communication at end-May - was “not a minor clerical oversight” but “a major gap”.

Speaking after this newspaper noticed the gulf between the Prime Minister’s April forecast and the subsequent outcome, as detailed in the Ministry of Finance’s report on the month’s fiscal performance, he argued that the sudden, unexplained swing and its extent “casts serious doubt on the reliability” of the Government’s projected $75.5m surplus for the current 2025-2026 fiscal year.

Simon Wilson, the Ministry of Finance’s financial secretary, could not be reached for comment and did not respond to Tribune Business messaged questions seeking an explanation for the changes. However, Mr Thompson told this newspaper that the swing is “a big difference. Over a $100m difference”.

The Prime Minister, in unveiling the 2025-2026 Budget, hailed April 2025’s revenue performance as being at “a high level”. He told the House of Assembly: “Typically, the month of April contributes approximately 12 percent to the total revenue intake over a ten-month period.

“According to the latest preliminary financial data, April 2025 is consistent with this trend, accounting for approximately 13 percent of total revenue over the ten-month period. The preliminary financial data shows revenue specifically for the month of April 2025 at $352.7m. The strong revenue performance in April suggests that fourth quarter revenue performance will be very strong.”

The revenue numbers were close to those detailed in the Ministry of Finance’s April 2025 report. However, Mr Davis was some way off the mark with his surplus/deficit projection, which measures by how much the Government’s revenue income either exceeds or is less than its total spending for a particular period.

“Earlier in this communication I mentioned the fiscal performance for April 2025. With the strong revenue performance, preliminary data shows April 2025 at a surplus position of $135.4m. So again, Madam Speaker, it is due to this second half performance that we feel confident in reaching a deficit within our target range of 0.3 to 0.7 percent of GDP.”

That, based on the Ministry of Finance’s release, was rather optimistic as - rather than a surplus - total spending for April exceeded revenue income by a modest $2.1m to produce a deficit. While it has to be recognised that one month does not make a fiscal year, and that deficits have been brought down from their $1bn-plus peak during the COVID-19 pandemic, the April 2025 outcome raises several issues.

This year’s performance, in contrasting sharply with April 2024’s $36.2m Budget surplus, leaves the Government’s fiscal deficit for the first ten months of the 2024-2025 fiscal year at $168.8m - a sum almost $100m more, or equal to 141.8 percent, of the full-year target set at $69.8m. 

And the two remaining months in the fiscal year - May and June - are traditionally when the Government has run high deficits due to the fact that the Ministry of Finance is presented with bills and IOUs which it often knows nothing about by ministries, departments and agencies eager to clear liabilities before the fiscal year-end.

Given this history, the Davis administration is unlikely to make up significant ground and get closer to the full-year target. It did, though, manage to contain the combined May and June 2024 deficit to just $9.8m, although many observers suspect this was achieved by kicking multi-million dollar payables owed to vendors into the new fiscal year - something it can do under its cash-based accounting system.

Still, a repeat of this in 2025 would place the full-year deficit at around $178.6m and represent a small improvement on 2023-2024’s $194m. However, such an outcome trigger a number of consequences, including the possibility that this current fiscal year’s forecast Budget surplus could be endangered if significant receivables have been pushed into it.

One source, speaking on condition of anonymity, asserted that if the $168.8m ten-month deficit persists for a full year it will trigger fiscal responsibility clauses within the Public Financial Management Act that require the Government to come to Parliament with a corrective plan if they miss the deficit target by a sum greater than 0.5 percent of gross domestic product (GDP).

Based on the Government’s own 20252-296 Budget numbers, 0.5 percent of GDP is equivalent to $87.25m. So a full-year deficit higher than $157.05m would, in theory, trigger that corrective action plan clause. “They are way off from where they projected to be,” the source said of the Government.

“If they are off by more than 0.5 percent it’s supposed to trigger the fiscal readjustment plan. The projected surplus number is already looking shaky ad if they kick more of the payables into this year that will make it almost impossible. Their Budget targets are almost completely out of the window. If the Prime Minister said consistently they are going to meet that target, what is the Ministry of Finance saying now?

“How could the Prime Minister have been so off? It’s one thing to be projecting a $100m surplus and only achieve $80m... That’s a massive, massive deviation and one they should have really explained. You just don’t put that out there with no explanation. The creditors and credit rating agencies will be looking at that and being off by such an amount for a given month.”

Mr Thompson, meanwhile, added: “The Prime Minister must provide a satisfactory explanation for the glaring $137m discrepancy in the Government’s April fiscal reporting. The Prime Minister’s annual Budget communication is the Government’s most important financial statement to the Bahamian people. As such, its figures must be accurate, consistent and credible.

“In his Budget communication, the Prime Minister said the following: ‘With the strong revenue performance, preliminary data shows April 2025 at a surplus position of $135.4m’. It is deeply concerning that the Prime Minister announced a projected $135m surplus for April 2025, only for official fiscal data to later reflect a $2m deficit for that same month.

“This is not a small difference. It is a major gap that demands a clear and transparent explanation. This is not a minor clerical oversight. It raises serious questions on the integrity of the projections presented to the public by the Prime Minister,” Mr Thompson added.

“Bahamians are right to be concerned. If a $135m surplus can vanish in just one month, it casts serious doubt on the reliability of the Government’s claim of a $75m surplus going forward. What this situation highlights is the urgent need for stronger financial governance and greater accountability. The Bahamian people deserve better - better math, better accounting and better management of public finances.”

The Ministry of Finance, in its statement, made no mention of the difference between the Prime Minister’s Budget projection and the April outcome as shown by its own data. It merely referred to a “moderate overall deficit” for the month, and said: “During the review month, revenue receipts totaled $347.4m, a 3.9 percent decrease from the prior year, with the tax component declining by $15.2m to $325.8m.

“This outcome was primarily driven by timing differences in the receipt of Business Licence fees compared to the prior year. Key gains were registered for VAT collections ($8.6m) and gaming tax receipts ($6.5m). Non-tax revenue edged higher by $0.9m to $21.5m, almost entirely derived from the sale of goods and services ($21m).”

April 2025, though, should have enjoyed a significant advantage on the revenue front given that Easter fell during the month whereas it arrived in March the year before. Thus peak tourism activity from the Easter weekend should have been captured in April this year, helping to boost tax and other revenue collections, but instead the Government’s income was down by almost 4 percent.

“Aggregate expenditure settled at $349.5m, with the recurrent and capital components at $330m and $19.6m, respectively,” the Ministry of Finance added of April spending. “The year-over-year $25.4m gain was largely associated with higher outlays for the use of goods and services ($20m), transfers ($7.5m) and subsidies ($7.3m).

“Capital expenditure declined by $3.1m due to lower spending on transfers and acquisition of non-financial assets. As a result of the above movements, the Government’s overall fiscal position for April 2025 recorded an estimated deficit of $2.1m. Financing activities for the month featured an estimated increase in the outstanding debt stock by $6.7m.”