By Fay Simmons

Tribune Business Reporter

jsimmons@tribunemedia.net

A Cabinet minister yesterday pledged that the Government will maintain fiscal discipline and not engage in runaway public spending in a bid to help it retain office at the upcoming 2026 general election.

Michael Halkitis, minister of economic affairs, told the Bahamas Institute of Chartered Accountants (BICA) Accountant’s Week conference that The Bahamas is experiencing renewed economic momentum that has been boosted by the International Monetary Fund’s (IMF) upward revision to its growth prospects.

He reassured that, despite the upcoming election, the Government will maintain fiscal prudence and manage public spending carefully, signalling that it will not take on unnecessary debt or overspend to gain political advantage.

“We have new momentum. We are very, very encouraged by the revision upwards of our growth prospects by the IMF in its recent report for the World Economic Outlook,” Mr Halkitis said. “And I want to assure you, sometimes I go and meet with the international financial institutions, investors, the banks, etcetera, and one of the questions they ask is: When we go to the IMF?

“They say, ‘Well, you’ve got an election coming. How disciplined are you going to be when it’s time to start spending?’ And we say we’re going to keep up the discipline.” During the question-and-answer segment after his speech, Mr Halkitis was asked whether the Government expects to borrow any more extra during the mid-year Budget in February. 

He replied that the Government appears to be on track with its projections so far, and does not anticipate needing to request additional funds. 

“No, we appear to be on track with our projections so far. Well, we’ve just done about a quarter and one month, so it is not anticipated that we, you know, come back to request additional money,” said Mr Halkitis. 

He explained that the first quarter of the fiscal year, the three months to end-September, is typically slower for revenue collection while expenses remain steady, which can create the appearance of a shortfall.

“As you know, during the first half of the year, revenues are normally slower while expenses remain constant. During the second half of the year, the Government receives most of its revenue, so sometimes it might seem that you need to do some catching up when you get to mid-year,” said Mr Halkitis. 

He added that the Government expects overall revenue performance to improve this year, in part due to new sources of income - including the newly implemented Domestic Minimum Top-Up Tax, or 15 percent corporate income tax on entities that are part of multinational groups with over 750m euros in annual turnover. This tax will generate revenue for the first time before the end of the calendar year.

“This year we expect, amongst other things and the overall improvement in revenue performance, that one of the components of our strategy - finding new sources of revenue - will contribute,” said Mr Halkitis. 

“One of those new sources is, we have been able, over the last period - we just completed it, but it’s been a work in progress for some time - the Domestic Minimum Top-Up Tax, from which we expect to get revenue for the first time before the end of this calendar year from one of the taxpayers who wanted to accrue since 2024. Going into fiscal year 2025-2026, we expect to see more revenue from that.

“So short answer is, no, we don’t expect to [borrow more], barring any disaster.”