By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government’s March fiscal numbers indicate that VAT and many key revenue sources are likely to fall short of their 2024-2025 full-year targets, it was revealed yesterday.

The Ministry of Finance, unveiling the Government’s financial performance for the first nine months of the current fiscal period, which is due to close at the end of this month, confirmed that March’s strong $169.6m surplus had come close to slashing the year-to-date deficit almost in half.

The monthly surplus, which measures by how much government revenues exceeded total spending in a given period, cut the $348.5m deficit at end-February 2025 to some $178.9m just over four weeks later - a 48.7 percent month-over-month decline.

While that represented a major positive for the Davis administration, total VAT and other taxes collected for the nine months to end-March 2025 were below 75 percent of their full-year targets with three-quarters of the 2024-2025 full-year gone.

VAT collections to end-March, for example, stood at $1.045bn or 68.9 percent of the full-year target. This requires the Government to collect $470.9m during the final three months of the 2024-2025 Budget year, which only includes one peak winter tourism season month in April, where Easter fell this year, if it is to hit its $1.516bn projection.

Only real property taxes, with $172.9m of the targeted $230m collected by end-March, and international trade and transaction taxes, where $627.3m of the forecast $830.5m revenue had been obtained, were tracking above 75 percent with three-quarters of the fiscal year passed. While Excise Tax at end-March was more than double the full-year goal, the latter had been just $3.8bn.

As a result, the Government’s total revenue appeared behind pace to strike the $3.543bn full-year target with some $2.458bn, or 69.4 percent, received by end-March. Total tax revenues had reached 70 percent of the full-year Budget target, standing at $2.199bn compared to $3.143bn, while non-tax revenue had reached 65.5 percent of the objective at $258.2m compared to $394.4m.

The figures back predictions by Gowon Bowe, Fidelity Bank (Bahamas) chief executive, and a former Fiscal Responsibility Council member, that the Davis administration is unlikely to hit its full-year revenue target for 2024-2025.

Based on the $2.5bn in taxes and other revenues collected during the nine months to end-March 2025, he explained that the Government is on track to generate around $3.3bn in total income for the 2024-20255 full-year - an outcome that would be around 6.7 percent, or $237m, off the $3.537bn target.

Should this become reality, Mr Bowe told this newspaper that the Davis administration would have to increase its revenue income by around 20 percent year-over-year to hit the 2025-2026 target. Should its 2024-2025 full-year income come in at $3.3bn, it will need to increase revenues by 17.8 percent or $537m - more than half-a-billion dollars - to hit next year’s fiscal targets.

“There are significant sensitivities that are not discussed at this point,” Mr Bowe said previously of the Budget. “The revenue for 2025-2026 jumping to $3.9bn... If you extrapolate from the first nine months [of 2024-2025], they are on target for $3.3bn. If they are likely to come in around $3.3bn, that is a 20 percent increase.

“That’s not to say that’s not achievable, but if you spoke about a potential economic slowdown in the US, that will impact GDP and GDP growth in the country” and cause a possible reduction in economic activity and the Government’s tax revenues.

And, with no major revenues unveiled by the Government in the form of new and/or increased taxes, Mr Bowe said: “I have difficulty in understanding how we get to the higher revenue numbers. The [Budget] surplus is heavily contingent on achieving that revenue target.

“The one thing I do know in government finances is that the expenditure is never predicated as a percentage. It’s always hard numbers. Each ministry or agency says this is what they want to spend. On the expenditure side, very rarely do you see under-budgeting. That only comes with revenue. The revenue side is the one that has sensitivity.”

The March fiscal report, though, suggested that the Government has had some success in containing its spending. Recurrent expenditure, which goes on fixed costs such as civil service salaries and rents, stood at 72.5 percent of the $3.269bn full-year target with three-quarters of the fiscal year gone. And total spending, at $2.637bn, was 73 percent of the $3.613bn budgeted for 2024-2025.

“Preliminary data for March 2025 indicates a substantial improvement in the Government’s fiscal position as the overall fiscal surplus more than doubled to $169.6m from $83.4m in the prior year,” the Ministry of Finance report said. “This performance was supported by a $62.7m (17.5percent) boost in total revenue to $420.9m and a $23.5m (8.6percent) decline in total expenditure to $251.2m.

“Accounting for a dominant 92 percent of total revenue, tax receipts firmed year-on-year by $64.9m (20.2 percent) to $387.1m. Gains in international trade and transactions of $36.3m (62.6percent) to $94.2m were underpinned by enhanced enforcement measures. 

“Similarly,VAT receipts improved by $14.4m (12.9percent) to $126m and taxes on use and permission to use goods were higher by $13.1m (16.2percent) at $93.4m. Non-tax revenue collections declined slightly by $2.2m (6.1 percent) to $33.8m,” the Ministry of Finance added. 

“Sales of goods and services, mainly derived from Immigration and Custom administrative-related fees generated a $2.6m (12.4 percent) rise in fees to $23.4m. Other non-tax revenues were lower by $4.8m (31.4percent) at $10.5m.”

The Ministry of Finance added: “During March 2025, central Government’s debt declined by an estimated $30.7m. Proceeds of borrowings totalled $365.6m, equally split between Bahamian dollars and foreign currency. The $396.3m in debt repayments was mainly linked to foreign currency (54.1 percent) obligations.”