The country’s coffers are filling a little faster these days with a key government official reporting that revenue collection was more than $30 million above projections in the last three months.
For the period July through October, the first four months of the 2002-2003 fiscal year, revenue collection was about $60 million behind projections, so the turnaround is welcomed news, Minister of State for Finance James Smith said in an interview with the Bahama Journal Monday.
The government expects to collect approximately $60 million to $75 million per month. When intake exceeds projections, officials view this as a positive sign.
The increased collection has the effect of decreasing the budget deficit, creating a surplus when balanced budgets are projected and creating an even bigger surplus in situations when a budget surplus is already expected, according to experts.
The 2002-2003 budget projected a deficit of $180 million.
“This performance has substantially reduced the difference between actual receipts and the budget estimates,” said Minister Smith, referring to revenue intake of November, December and January. “The first four months were below estimates and the last three months were above the budget.
“It’s good to see that at this point we’re not getting worse. Indeed, we are getting a little better in terms of receipts, but I wouldn’t go beyond that.”
Minister Smith said that revenue intake in November was about $7 million higher than what had been projected. In December, it was $14 million above what had been anticipated and in January, it was about $10 million above estimates.
He said, “We are hopeful that based on tourist arrival figures, the upward trend would continue, of course, barring adverse international disruptions like the Iraqi war.” Getting projections wrong could be detrimental to any government, except if those projections turned out to be too conservative, experts have pointed out.
With crucial budget preparatory months ahead, the new government faces the task of coming up with new projections in the face of uncertain economic times.
“In any budgeting process, it starts necessarily with your revenue projections, so you have to try and be a little more accurate because it is on the basis of that that you allocate your expenditure,” Minister Smith pointed out.
“And so if you get it wrong with the projections, then you find at the end of the day you really end up with a larger deficit or you end up having to go to market and fund the difference that you didn’t account for in the projections, so the idea is to try to get the projections on revenue correct and work from there because that will determine how successful the outcome would be a year from today.”
As he looks ahead to the months of preparing a new budget, Prime Minister Perry Christie expressed satisfaction that revenue collections have increased.
He also expressed enduring optimism.
“The months of November and December were encouraging indicators that the revenue position was improving. We believe that tourism has shown gains and we are encouraged that moving through January into February and March that there will continue to [be] improved figures, subject, of course, to war,” Mr. Christie told the Bahama Journal.
“So really, when we are in the process of recovering from September 11, 2001…we are faced with another setback, potentially. We believe that if there is not a war, that we will proceed uninterrupted with major investments that are in the process of being settled and that investors will continue to demonstrate their confidence in The Bahamas by expanding existing tourism plants [and] by implementing plans for new hotels.”
By Candia Dames, The Bahama Journal
