By LYNAIRE MUNNINGS 

Tribune Staff Reporter 

lmunnings@tribunemedia.net

ECONOMIC Affairs Minister Michael Halkitis yesterday sought to clarify the government’s projected $75m surplus for the 2025/2026 fiscal year, emphasising that the surplus is a direct result of fiscal discipline and will be used solely to reduce the national debt, not for additional spending.

During his 2025/2026 Budget Contribution in the Senate, Mr Halkitis said the surplus means the government expects to collect enough revenue to fund its programmes fully and still have $75m left over.

He said the entire surplus is earmarked for debt reduction, with the national debt expected to fall from $11.461bn to $11.386bn in the next fiscal year. According to Mr Halkitis, this will help lower interest payments, which have more than doubled in under a decade, from $273m in 2017 to a projected $668m this year. That figure is expected to decline to $602m in 2026 and $565m by 2027.

“I didn’t choose 2017 for any particular reason,” he said. “It’s just that I wanted to give us a few years and to demonstrate that this goes across administrations. So from $273m — more than double in less than ten years — it’s unsustainable, because that means that is money that could be more properly invested in our people.”

“And so the surplus is a big deal because we can see the debt of the country begin to come down, and we know that the level of the debt has been something that has been occupying and causing concern to Bahamians for a long time.”

Mr Halkitis said the surplus does not indicate room for financial laxity. “It does not mean that there’s free money or the government can just throw money around,” he said. “All it means is that within its capacity to execute, the government has enough money to fully and adequately fund the works of the government for this year.”

The government projects total revenue of $3.89bn, representing 23.6 percent of GDP. Mr Halkitis noted that the deficit has steadily declined from 11.9 percent of GDP in 2020 to a projected surplus of 0.5 percent in the upcoming fiscal year. The primary balance is expected to post a surplus of 4.5 percent of GDP, and the debt-to-GDP ratio is forecast to fall to 68.9 percent by the end of the fiscal year and to 61.3 percent by 2027–2028.

He described the shift from the country’s largest-ever deficit in 2020/2021 to a projected surplus as a sign of “responsible leadership.” He said the economy recorded real GDP growth of 3.4 percent in 2024, with nominal growth at 3.7 percent, alongside a record 11.2 million international visitors last year.

The Free National Movement (FNM)has dismissed the government’s fiscal forecast as inaccurate and politically motivated, accusing the Davis administration of exaggerating economic progress ahead of the next general election. The party has questioned how a government facing a $395m mid-year deficit in December, along with over $122m in unpaid bills, could credibly project a surplus.