By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Prime Minister yesterday voiced confidence the $363.6m Budget surplus generated between February and April this year will enable the Government to hit its deficit target amid Opposition scepticism.

Philip Davis KC, unveiling the 2025-2026 Budget in the House of Assembly, asserted that the traditionally revenue-rich period in the fiscal year will enable his administration to bring the current year's deficit - which measures by how much the Government's spending exceeds revenue - in within range of the original $69.8m target.

For the second consecutive Budget, though, he avoided giving a projected figure for the 2024-2025 deficit, instead providing a range of between 0.3 percent to 0.7 percent of gross domestic product (GDP) or economic output. Using GDP data, Tribune Business calculates this as being between $52.35m and $122.15m, meaning that the Government could either beat or miss its forecast.

Based on the figures disclosed by Mr Davis yesterday, the Government's fiscal deficit for the nine months to end-March 2025 stood at around $38.3m after the revenues generated during the peak winter tourism season, traditionally the high point of annual Bahamian economic activity, coupled with Business Licence fees and the bulk of real property tax collections, slashed the $402m deficit at end-January.

In addition to the $58.6m surplus, where revenues exceeded total government spending, in February, further monthly surpluses of $169.6m and $135.4m were achieved in March and April, respectively, to bring the 10-month deficit down below the $69.8m full-year target. May and June, though, have traditionally been deficit and heavy spending months, so the Government will have to focus on cost control.

Mr Davis, though, said the Government expects to get a further boost from the fact that 50 percent of the $100m worth of disputes before the Tax Appeals Commission have been settled. "Revenue receipts demonstrated strong performance during the nine months leading up to March 2025, as well as in April 2025," he said.

"This momentum, coupled with the successful resolution of tax tribunal cases, where 50 percent of the $100m in dispute has been settled, is expected to drive a late surge in tax collections and improve overall revenue performance for the year.

"Despite a notable shortfall in VAT collections from the real estate sector, revenue is still projected to be near its annual forecast. On the expenditure side, public spending has remained aligned with the Budget, even after an initial front-loading of payments earlier in the fiscal year and is expected to remain contained within its annual forecast," the Prime Minister continued.

"As a result, the fiscal deficit will fall within a range of 0.3 to 0.7 percent of GDP. However, if we use last year’s performance to extrapolate the projected fiscal balance outturn for this current fiscal year, the fiscal deficit will be estimated to fall under 0.3 percent of GDP. As such, my administration is confident that we will hit our deficit target for the full 2024-2025 fiscal year.

"In the first half of this fiscal year, we experienced a six-month deficit of $404.1m. However, for the majority of the second half of this current fiscal year, we have witnessed monthly surpluses. The month of February 2025 experienced a surplus of $58.6m. The month of March 2025 settled at a surplus of $169.6m.

"Earlier in this communication I mentioned the fiscal performance for April 2025. With the strong revenue performance, preliminary data shows April 2025 at a surplus position of $135.4m. So, again, Madam Speaker, it is due to this second half performance that we feel confident in reaching a deficit within our target range of 0.3 to 0.7 percent of GDP."

Gowon Bowe, Fidelity Bank (Bahamas) chief executive, yesterday suggested that the nine-month data suggests the Government's total revenue income - which stood at $2.5bn then - was likely to under-shoot the $3.537bn full-year target given that final quarter collections are not expected to be as strong as during the tourism winter peak.

In particular, while VAT collections expanded by $50.8m year-over-year to hit $1bn, this sum amounted to just 68.9 percent of the total full-year projection with three-quarters of the fiscal year already passed. Total revenue for the nine months to end-March hit $2.5bn, an increase of $266.3m or 12.2 percent year-over-year, standing at 69.4 percent of the full-year target.

Still, Mr Davis added of April: "It is important to highlight that the revenue performance for the month of April 2025 is at a high level. Typically, the month of April contributes approximately 12 percent to the total revenue intake over a ten-month period.

"According to the latest preliminary financial data, April 2025 is consistent with this trend, accounting for approximately 13 percent of total revenue over the ten-month period. The preliminary financial data shows revenue specifically for the month of April 2025 at $352.7 million. The strong revenue performance in April suggests that fourth quarter revenue performance will be very strong as well." 

And, turning to the Government's primary balance, which measures by how much the Government's revenues exceed its non-interest (debt servicing) spending, Mr Davis added: "At end-March 2025, the primary balance reflected an increase in the surplus position, equating to $268.4m or 1.7 percent of nominal GDP.

"This equated to 45.7 percent of the Budget forecast. This also represents an improvement over the primary surplus of $194.6m or 1.3 percent of GDP in the prior fiscal year." However, Michael Pintard, the Opposition's leader, yesterday suggested that the 2024-2025 fiscal deficit will be closer to $200m.

Given that May and June are typically high-expenditure months, when bills that the Ministry of Finance knows nothing about are presented for payment, he suggested that the Government will likely exploit its cash-based accounting system to roll payables owed to its vendors over into the 2025-2026 fiscal year - something it is suspected to have done last year to stay within range of its deficit targets.

"This is a government with record revenues that also managed to take on record spending," Mr Pintard said in a statement. "By the Prime Minister's own projection, the deficit is expected to come in at up to 0.7 percent of GDP this year, which is well over $100m.

"Of course, we expect the figure this year to be closer to $200m. We recall their mid-term budget report in December; they ran a deficit of $395m and had some $122 million in outstanding bills and arrears. So nobody is buying any talk of a fiscal surplus next year when, just this past December, the Government was facing a fiscal hole of over $500m when unpaid bills are factored in."