By Fay Simmons

Tribune Business Reporter

jsimmons@tribunemedia.net

A Cabinet minister yesterday pledged that the forecast Budget surplus of $75.5m for the upcoming 2025-2026 fiscal year will be used to pay down The Bahamas' $11.7bn national debt if achieved.

Senator Michael Halkitis, minister of economic affairs, told the Senate during the 2025-2026 Budget debate that the national debt will become “unsustainable” if left to grow by successive future administrations.

“In this Budget, The Bahamas projects its first budgetary surplus with a projected surplus of $75m. Much has been made about the surplus, and you've seen the memes, but what does it mean? Really?" he asked.

"What does it mean? Simply put it means that the Government is projecting that in the upcoming year, 2025-2026, the Government will collect sufficient revenue to adequately fund the programmes that the Government has to fund and still have $75.5m left over.

“So we're collecting enough money to do what you have to do and have funds left over. And what do we do with that $75.5m? We see in theBudget, in the estimates of revenue and expenditure, this year, the debt of The Bahamas stood at 11.461bn. Next year, the debt is projected to be $11.386bn. That's a debt reduction of $75.5m, so that surplus goes directly to reducing the debt of the Government of The Bahamas.”

Mr Halkitis said the surplus is a “big deal” as the Government will be able to reduce its debt, but it does not mean it will “abandon fiscal discipline” or has “free money” to pass around. “It's unsustainable, because that means that is money that could be more properly invested in our people," he added of the national debt and the interest payments to service it.

"And so 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, and so we see that the debt begins to go down.

“What does a surplus not mean? It does not mean that we let our guard down. It does not mean that we abandon fiscal discipline. Does not mean that there's free money or the Government can just throw money around. 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.”

Mr Halkitis said the Government is targeting a “gradual but consistent downward pattern” in debt reduction, and hopes to have a 61.3 percent debt-to-GDP ratio by 2027-2028.

“We are looking at total revenue of $3.89bn representing 23.6 percent of GDP, and we have seen our deficit trajectory reduced from 11.9 percent of GDP in 2020 to a projected surplus of 0.5 percent in 2025-2026," he added.

"The primary balance shows a robust surplus of 4.5 percent of GDP, and our debt-to-GDP ratio is projected to decline to 68.9 percent by the fiscal year-end, and down to 61.3 percent by 2027-2028 so a gradual reduction in our debt-to-GDP ratio."