Bahamas Records Fiscal Surplus in May; Fiscal Target Still Far Off

• The Bahamian Finance Ministry reported a fiscal surplus of B$26Mn in May 2024, on the back of increases in tax and non-tax revenues as well as contained recurrent and capital expenditures. This result is particularly meaningful as May is seasonally characterised by fiscal deficits (B$76Mn last year, B$81Mn in 2022).
• Notwithstanding, the government recorded a deficit over the first 11 months of FY2023-24 of B$151Mn. The imbalance was reduced from the B$230Mn observed during the first six months. The government’s initial target for the entire year was B$131Mn and later adjusted to B$210Mn, which still looks challenging to achieve.
• To reach the fiscal target for fiscal year 2024, the authorities must deliver a deficit of no more than B$60Mn in June. However, June is typically a month with large monthly deficits (B$319Mn last year; and B$212Mn in 2022) as many public entities unveil accounts payable before the fiscal year closes. As such reaching the B$60Mn target may be challenging.
• Of note, value-added tax (VAT) collections reported by the government undershot budget projections during the first 11 months of last year, which makes reaching the annual target difficult. Prime Minister (PM) Philip Davis blamed the underperformance on high-end real estate sales. As of May, total tax collection was 87% of the total budgeted for the year. The final number, however, is still uncertain as the government could defer payments to suppliers as well as reduce capital expenditures.
• Ruling Progressive Liberal Party (PLP) chairman and foreign affairs minister Fred Mitchell acknowledged that the government adopted a “pay as you go” stance rather than borrowing. However, he added that spending was reduced meaningfully during the year, which could also help the government reach its target.

(Source: Oppenheimer)