By FAY SIMMONS

TRIBUNE Business Reporter

jsimmons@tribunemedia.net

The Ministry of Finance’s top official yesterday declared The Bahamas is in "a special place financially" as it awaits confirmation of its first-ever annual Budget surplus, while warning that hurricanes, healthcare costs and infrastructure overruns could quickly erode those gains.

Simon Wilson, the financial secretary, addressing the Rotary Club of West Nassau, said The Bahamas’ fiscal position has improved significantly since the COVID-19 pandemic when the annual deficit exceeded 13 percent of gross domestic product (GDP).

"I think I can say without any contradiction that The Bahamas really is in a special place financially at this point," he said. "Our objective is that 2025-2026 will be the first year in our history that we have achieved a fiscal surplus."

Mr Wilson described the prospect of recording a fiscal surplus as a milestone in itself, adding that just a few years ago The Bahamas was grappling with unprecedented borrowing needs brought on by the pandemic.

"The fact that we can now credibly talk about achieving a fiscal surplus is an achievement in itself," he said, with the 2025-2026 fiscal year - which ended on June 30 - forecast to generate a $75.5m fiscal surplus.

Mr Wilson added that government revenues have grown by more than 25 percent during the COVID recovery period without introducing any new broad-based tax measures. Fiscal performance is expected to strengthen further in the 2026-2027 fiscal year due largely to the Qualified Domestic Minimum Top-up Tax (QDMTT), which is the 15 percent corporate income tax that applies to companies operating from or within The Bahamas that are part of groups with 750m euros in combined annual turnover.

Despite the improving outlook, Mr Wilson cautioned that several risks could quickly reverse those gains, with climate-related disasters topping the list. "Climate is always a risk in The Bahamas. We are in a hurricane zone, and a climate-related event can throw our budget off in a two or three-day period," he said.

To help cushion against such shocks, he said the Government has established fiscal buffers equivalent to about 3 percent of GDP, secured contingent lines of credit from international financial institutions and expanded disaster response funding while placing greater emphasis on climate-resilient infrastructure.

Mr Wilson also identified healthcare spending as a growing fiscal challenge, noting that the Government currently funds a non-contributory healthcare plan for thousands of public servants.

"Our legacy healthcare plan is non-contributory. The Government pays 100 percent of the cost, which is really not market-based in the current environment," he said, adding that expanding healthcare coverage through a broader contributory system should help ease long-term fiscal pressures.

Mr Wilson further warned that the Government's ambitious infrastructure programme, including roads, hospitals and energy projects, must be carefully managed to avoid cost overruns that would have to be financed through spending reallocations rather than new taxes.

Still, Mr Wilson argued The Bahamas is now positioned to move beyond fiscal recovery and focus on long-term economic expansion. "The next phase for us is how do we convert this into sustainable growth - not a sugar high, but sustainable growth," he said. "That only happens by making investments."