BICA: Q1 deficit spike highlights areas that require targeted action
Youri Kemp Senior Business Reporter youri@nasguard.com
Bahamas Institute of Chartered Accountants (BICA) President Pretino Albury said the increase in the fiscal deficit during the first quarter of 2024 highlights key areas that require targeted action, and speaks to the ongoing fiscal pressures the government is facing.
Albury, in an emailed message to Guardian Business queries on the budgetary performance report recently released by the Ministry of Finance, wrote: “I recognize the critical importance of transparency and robust financial management in fostering sustainable economic growth. The recently released budgetary performance report underscores both challenges and opportunities for our nation’s fiscal management.
“While the reported increase in the deficit for the first quarter of the 2024/2025 fiscal year is concerning, it highlights key areas that require targeted action. The rise in recurrent expenditure, particularly related to compensation, goods and services, and public debt interest, speaks to the ongoing fiscal pressures the government faces. “Additionally, the increase in subsidies to key institutions such as the Water and Sewerage Corporation, Bahamasair, and the University of The Bahamas reflects the necessary investments in essential services, albeit at a significant cost to the public purse.”
The Q1 report, for July to September 2024, revealed that the government’s deficit increased by more than $120 million during the period, when compared to the same timeframe last year. The government reported a deficit of $185.4 million in the first quarter of the 2024/2025 fiscal year, compared to $61.5 million in Q1 of the prior fiscal year.
The report said this outcome was a consequence of an increase in total expenditure by $142.6 million to $867.7 million. The report added that recurrent spending was higher by $83.5 million at $743.9 million, with the bulk associated with compensation outlays, payments of goods and services, and public debt interest.
It also said that subsidies, which include transfers to government-owned or controlled enterprises, rose by $10.5 million to $104.3 million, and accounted for 25.3 percent of the budget.
In addition, subsidies to public non-financial corporations increased by $9.1 million to $101.2 million, reflecting higher assistance to the Water and Sewerage Corporation, $5.5 million; Bahamasair, $2.2 million; and the University of The Bahamas, $2.4 million.
“On a positive note, the increase in capital expenditure, primarily for roadworks and school infrastructure repairs, demonstrates a focus on developmental investments that could yield long-term benefits for the country’s economic and social framework,” said Albury.
“From an accounting and financial perspective, BICA continues to advocate for enhanced financial reporting, strengthened fiscal governance, and a more strategic alignment of expenditure to revenue performance. The modest increase in revenue receipts, driven by tax receipts and non-tax yields, is a step in the right direction, but it is clear that further efforts are needed to broaden and deepen the revenue base, ensuring that expenditures are sustainable, and deficits are contained.”
He continued: “The institute remains committed to supporting the government, the private sector, and the wider public with expertise and guidance on financial management, economic strategy, and regulatory compliance. We encourage the continued publication of performance reports to foster accountability and informed public dialogue.
“As we move forward, it is critical to balance immediate fiscal needs with the long-term goal of reducing debt levels and ensuring fiscal sustainability for future generations. BICA stands ready to contribute to these efforts through collaboration and advocacy.”