By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government’s $137.5m April reversal to a modest deficit “certainly shakes confidence” in the fiscal data it releases, a banker asserted yesterday, but “doesn’t impact The Bahamas’ financial situation”.

Gowon Bowe, Fidelity Bank (Bahamas) chief executive, told Tribune Business he would “expect heads to roll” at the Ministry of Finance if the Prime Minister’s initial announcement of a $135.4m April Budget surplus had been caused by “a significant error in calculation” or faulty data that was used to derive that figure.

The Ministry of Finance’s monthly fiscal performance report for April 2025, released on Wednesday, revealed that the rosy surplus figure unveiled by Philip Davis KC was somewhat off the mark as the actual outcome was a modest $2.1m deficit. The Government yesterday struggled to explain the slide from projected surplus to actual deficit, which occurred in less than two months since the Budget’s unveiling.

The Davis administration yesterday sought to take cover behind the word “preliminary”, which the Prime Minister had used in referring to the forecast $135.4m April surplus when he disclosed it during the 2025-2026 Budget communication.

It also blamed the significant difference between that figure and the $2.1m deficit outcome on “late postings by the Treasury, particularly related to interest expenses on Treasury Bills”, and suggested that it was “normal” for reconciliations between preliminary and final monthly fiscal data to occur.

Latrae Rahming, the Prime Minister’s communications director, said in a statement: “In the 2025-2026 Budget communication, it was made clear that the fiscal data presented for April 2025 was preliminary and subject to revision.

“The variance between the initial surplus estimate and the finalised figures is primarily the result of late postings by the Treasury, particularly related to interest expenses on Treasury Bills. This is a normal part of the reconciliation process between preliminary and final monthly fiscal data.

“What remains most important is that all indicators continue to point toward the overall fiscal deficit for the full fiscal year, which ended on June 30, 2025, falling within the projected range of 0.3 to 0.7 percent of GDP, as communicated by the Prime Minister. The Government remains committed to sound fiscal management, accurate reporting and full transparency throughout the budgetary process.”

However, as reported by Tribune Business, the April outcome leaves the Government’s deficit for the first ten months of the 2024-2025 Budget year at $168.8m - a sum almost $100m more, or equal to 141.8 percent, of the full-year target set at $69.8m. This raises significant doubt that the full-year deficit will fall within the $52.35m to $122.15m range set by the Government.

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.

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 a move could 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.

Fiscal observers, meanwhile, also questioned the Government’s explanation that “late postings” of interest payments to investors holding its Treasury Bills was responsible for the $137.5m divergence. They pointed out that the Government’s interest, or debt servicing, costs - particularly the timing of such payments, how much and on which instruments - are known far in advance.

Thus, even if the interest payments had not been posted for April by the Public Treasury, they argued that officials would have known they were due and should have factored them into the monthly numbers and deficit calculations. The Government spent $86.2m on interest or debt servicing costs in April 2025, which is similar to the $85.4m outlay for the same month in 2024.

Michael Pintard, the Opposition leader, also challenged the Government’s explanation last night in arguing that it had “only made the situation worse”.

“Simply put, given that the Ministry of Finance and the Public Treasury know the timing of all interest payments during the year, there is no way the debt servicing on Treasury Bills would not have been fully factored into any calculation of the deficit or surplus for any month,” he blasted.

One source familiar with the Government’s fiscal operations, speaking on condition of anonymity, said of the Public Treasury “late postings” explanation: “That is a real weak excuse. It is laughably absurd. There is no way that, if the finance team was calculating the projected surplus or deficit for that month, would they leave out those interest payments.

“Interest is set. There are no fluctuations. Even if they are not yet posted they are one thing that you can mark your calendar by. It’s an absurd, sad, sad excuse. I can say without contradiction that the Public Treasury does cash flow projections every year on a month-by-month basis with specific peculiarity, and factored into that are all the known interest payments.

“You know the timing in advance. They know when they come due; whether it’s 180 days or 360 days. Even if they were not posted they would have known of them.”

Mr Bowe, meanwhile, told Tribune Business that future fiscal data presented by the Government will have its credibility called into question unless the Ministry of Finance can clearly explain the variation between the Prime Minister’s forecast and April’s actual deficit outcome and the reasons for why this has occurred.

Suggesting that the cause could have been faulty data and/or miscalculation by Ministry of Finance officials; an error by the Prime Minister’s speechwriters and those who put together the Budget communication; or a combination of both, the Fidelity Bank (Bahamas) chief nevertheless said the fall-out is unlikely to damage The Bahamas’ fiscal position or reputation with the credit rating agencies.

He explained that the likes of Moody’s and Standard & Poor’s (S&P), as well as multilateral agencies such as the International Monetary Fund (IMF), have already predicted that the $69.8m deficit target for 2024-2025 was unlikely to be met. As a result, the $168.8m deficit for the ten months to end-April 2025 was largely in line with their forecasts so they are unlikely to be disturbed by the April controversy.

However, Mr Bowe warned against the politicians exploiting the situation to the extent it becomes a “game of chicken little” where the Government’s opponents constantly cry “the sky is falling, the sky is falling”. Arguing that this would be an “exaggeration”, he instead urged Bahamians to demand “accountability” and the reasons for the $137.5m “variance”, with consequences for those who made mistakes.

“I would say the concern comes from whether or not the Government clearly explains the error in the communication by the Prime Minister,” Mr Bowe told this newspaper. “I would be most concerned if the Ministry of Finance remains silent in refusing to clarify whether there has been misrepresentation on the part of the Ministry of Finance.

“I’m not by any stretch of the imagination saying there has not been a significant variance. But I would doubt the level of variance is purely a miscalculation versus what was in the political exuberance that took place in the House of Assembly” during the Budget communication. Mr Bowe said the difference could have occurred if those writing the communication included the wrong figures.

“The concern only arises if the Ministry of Finance fails to appropriately analyse and articulate the reasons for such a significant variation,” he added. “I don’t put that on the Minister of Finance and the legislators. I put that on the Ministry of Finance,” he added.

“They are relying on the technical people to provide the information. They are not going to be performing audits on the information. I would expect heads to roll if there was such a significant error in calculation.”

However, Mr Bowe argued that given existing “scepticism” about the Government’s fiscal targets and projections it was unlikely that what he described as “an egg in the face moment” for the Government will have any impact on The Bahamas’ financial standing and reputation.

Given that the fiscal year’s fourth quarter is a “break even” period for the Government at best, he explained that creditors, credit rating agencies and multilateral agencies had already factored in that The Bahamas was unlikely to “make up the stagger” between the end-March 2025 deficit of $166.7m and the full-year’s $69.8m goal.

“As it relates to the fiscal circumstances of the country, this doesn’t have a significant impact because people had not factored in such a level of decline,” Mr Bowe told Tribune Business. “It certainly does shake the level of confidence in the quality of [the Government’s] communications, and that needs to be resolved by deliberate analysis and articulation of whether this was an error in calculation, an error in communication or a combination of both.

“It’s of the magnitude that it should result in significant consequences for the party responsible; a fall on the sword-type moment.” He added that the fall-out may result in external investors relying on their own fiscal projections, due to a loss of trust in the accuracy of the Government’s, reiterating: “It doesn’t shake confidence in the country but it does shake reliance on the Government’s information.... It doesn’t change the fiscal circumstances of the country.”