By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Prime Minister yesterday touted that his administration will achieve The Bahamas’ “first-ever” Budget surplus in the upcoming 2025-2026 fiscal year despite slashing its size by almost $373m.

Philip Davis KC, unveiling the Government’s revenue and spending plans for the 12 months to end-June 2026, told the House of Assembly that the forecast $75.5m surplus for that period - meaning that his administration’s tax and other revenue income is projected to exceed public spending - proves “fiscal discipline can co-exist with a bold vision for national progress”.

However, the figures revealed yesterday represent a massive revision - equal to an 83.2 percent reduction - in the size of the 2025-2026 Budget surplus compared to what the Government was forecasting just one year ago. For in the 2024-2025 Budget estimates, the Davis administration predicted that the surplus would be almost six times’ higher at $448.2m as opposed to the now-revised $75.5m.

The 2025-2026 spending and revenue estimates also reveal a more cautious outlook on the Government’s fiscal performance beyond next year. Having forecast a $457.8m surplus for the following 2026-2027 fiscal year just 12 months ago, the Davis administration is now projecting that this will now come in almost 35 percent, or $156.8m, less at $291.4m.

With the estimated 2027-2028 surplus, which did not feature in last year’s Budget projections, forecast to be only slightly bigger than the prior year at $299.6m, the Davis administration appears to be adopting a less bold and ambitious outlook - and possibly a more realistic approach - on the pace and extent of The Bahamas’ fiscal consolidation moving forward given global economic realities.

However, the revised projections do not necessarily diminish the achievement of a Budget surplus - provided it comes true and is attained. Michael Pintard, the Opposition’s leader, yesterday said the fiscal forecasts only represent a “future possibility” and have yet to become reality as he accused Mr Davis and the Government of giving the “misleading” impression it has already been achieved.

The Prime Minister returned several times to the projected 2025-2026 surplus during his House of Assembly presentation which sought to talk up his administration’s achievements during its three-and-a-half years in government ahead of the upcoming general election.

“For the very first time since Independence, we have finally secured the achievement of a balanced Budget. More than a balanced Budget – a Budget with a surplus,” Mr Davis said as he launched into the Budget address, although he was referring to the upcoming fiscal year rather than the current 2024-2025 period.

Then, giving a broad overview of the 2025-2026 fiscal projections, the Prime Minister later added: “The 2025-2026 Budget estimate for total revenue amounts to $3.89bn or 23.6 percent of GDP (gross domestic product). Total expenditure is estimated to amount to $3.82bn or 23.1 percent of GDP.

“Of this, recurrent expenditure accounts for $3.44bn or 20.8 percent of GDP, and capital expenditure for $376.3m or 2.3 percent of GDP. The fiscal surplus is estimated at $75m or 0.5 percent of GDP, with the primary balance showing a surplus of 4.5 percent of GDP. Given this, the debt-to-GDP ratio has been projected at 68.9 percent of GDP at the end of fiscal year 2025-2026.”

Lauding the fiscal projections for the upcoming fiscal year, Mr Davis added: “For the first time in our history as an independent nation, a minister of finance will be tabling a balanced Budget - evidence that fiscal discipline can co-exist with a bold vision for national progress.

“We accomplished this without sacrificing development priorities or slowing the pace of investment. We did it without resorting to reckless cuts, or firing dedicated employees, just to claim a quick win. This balanced Budget is the result of careful planning, responsible leadership and a steadfast commitment to the Bahamian people.

“And it is our continued commitment to fiscal responsibility that will allow us to continue making game-changing investments in our country and in our people.” Mr Pintard, though, argued that the Prime Minister’s comments suggested that the Budget surplus had already been achieved even though it is only a future projection that has to be executed on.

“The Prime Minister, in my view, was intentionally misleading,” the Opposition leader blasted to Tribune Business. “He sought to give the impression that the Government had balanced the Budget and achieved the surplus when, in fact, he was talking about a future possibility.

“It was intentionally, in our view, misleading and disingenuous... The bottom line in actual numbers is they have not achieved the reduction in the deficit [for 2024-2025] they had projected, and they will not achieve the balanced Budget and surplus forecast given the fact they are not making any fundamental adjustments in their behaviour - the way they are spending, entering into PPPs without us knowing what the terms are. These are off-the-books loans.”

Mr Pintard, in a later statement, asserted that “nobody is buying any talk of a fiscal surplus next year” given the Government’s prior fiscal performance, and added: “Any discussion about a surplus for the upcoming fiscal year 2025-2026 is nothing but a sad farce and diabolically misleading.”

Gowon Bowe, Fidelity Bank (Bahamas) chief executive, and a former Fiscal Responsibility Council (FRC) member, told Tribune Business that he, too, found the “first-ever” Budget surplus assertion “a bit overly optimistic because this is what has been forecasted, projected, but the Government or administration has to actually execute on the Budget to achieve that surplus”.

The Government’s fiscal projections have significantly increased its forecast recurrent spending for both the 2025-2026 and 2026-2027 fiscal years compared to the estimates released 12 months ago. Recurrent spending, which covers the Government’s fixed costs such as salaries and rents, has been raised by almost $300m for 2025-2026 to $3.445bn compared to last year’s $3.154bn estimate.

As for 2026-2027, recurrent spending is currently pegged at $3.58bn - again almost $300m higher than the estimate produced at the same time last year. And, after lowering the 2025-2026 revenue forecast by $62.6m, dropping it to $3.887bn compared to $3.95bn just 12 months ago, the Government is forecasting a major 2026-2027 revenue surge to $4.254bn that is higher than its previous projection.

Mr Davis yesterday said the Government had developed the 2025-2026 Budget “with a full appreciation of the risks and uncertainties” surrounding the global economic outlook due to the ongoing upheaval caused by Donald Trump’s trade and tariff policies. The Bahamas, as a small, open economy with the US as its major trading partner, cannot escape “a notable slowdown..now widely anticipated”.

“Needless to say, the global economic environment that we confront as we set our policy and fiscal priorities for the 2025-2026 Budget is one replete with challenges,” Mr Davis acknowledged in his Budget statement.