Bahamas’ Fiscal Deficit Widens to $201.3Mn In Q2 2025/2026 Fiscal Year

• The Central Bank of The Bahamas (CoB) reported that the government’s deficit for Q2 FY2025/26 widened to $201.3Mn, up from $190.2Mn in Q2 2024/25.
• Total revenue fell $40.5Mn (-5.3%) to $718.0Mn, driven primarily by a $47.2Mn (-7.0%) drop in tax receipts, overshadowing the $29.3 million (3.1%) falloff in aggregate expenditure to $919.3 million.
• Taxes on international trade and transactions fell $33.9Mn (-15.1%) to $191.2Mn, reflecting declines in departure taxes of $17.3Mn, (-18.5%) and export and excise duties down 23.9% or $15.9Mn. The decline in departure taxes is likely attributable to outstanding cruise departure tax and sustainability levy payments, which totalled approximately $18.8Mn for H1 FY2025/26 and remained owed to the Government as at December 2025.
• Taxes on goods and services fell $10.8Mn (-2.6%) to $396.1Mn, including VAT (-0.6%) and stamp taxes (-2.4%). Specific taxes, mainly gaming, fell $6.3Mn (-35.4%), and excise taxes by $0.7Mn (-23.3%). Taxes on the use of goods and services dropped $1.3Mn (-3.6%) to $33.5Mn, largely due to lower business license fees. Property taxes declined $4.0Mn (-9.3%) to $39.3Mn. Non-tax revenue rose $5.9Mn (7.1%) to $88.9Mn, led by customs fees up $5.5Mn or 36.4% and higher fines, penalties, and forfeitures.
• That said, aggregate expenditure also fell by $29.3Mn (-3.1%) to $919.3Mn amidst weaker revenue uptake. Recurrent spending declined $22.4Mn (-2.6%) to $854.5Mn, including lower payments for goods and services (-$33.9Mn, -18.0%), miscellaneous payments (-$8.2Mn, -11.5%), and subsidies (-$3.6Mn, -3.2%). Grants fell sharply (-$3.5Mn, -89.2%). In contrast, debt interest rose $11.1Mn (5.0%) to $234.2Mn, personal emoluments grew $12.1Mn (5.5%) to $231.4Mn, and social benefits increased $3.5Mn (6.2%) to $60.8Mn.
• Capital spending decreased $6.9Mn (-9.7%) to $64.8Mn, largely due to a $14.3Mn (-21.9%) drop in non-financial asset acquisition, partially offset by a $7.3Mn rise in capital transfers to $13.9Mn.
• The widening deficit reflects persistent pressure on government revenues, primarily from trade- and consumption-related taxes, even as expenditure moderation partially offsets the impact. Non-tax revenues and targeted areas of growth in capital transfers provide some fiscal flexibility, but reliance on volatile trade-related taxes leaves the fiscal position sensitive to external shocks.

(Source: The Nassau Guardian)