Central Bank Governor Julian Francis called on the public to support Prime Minister Perry Christie’s budget aimed at containing expenditure and reducing the deficit even though it calls for a $5 increase in fees for driver’s licences and car inspections among others.
According to Mr. Francis, the Prime Minister is sending a strong and encouraging message to the international community that The Bahamas is serious about its finances, and determined to maintain its expenditure within prudent limits.
“I think that the public does need to know that it is absolutely essential for the Government to do what it is doing,” he said Thursday on radio.
In his budget speech Wednesday, the Prime Minister said:
“Simply throwing more money at problems would not necessarily be the better solution to accelerating progress. Indeed, the careful and prudent management of the limited resources which we have, is by far the more prudent approach. In view of the fact that increasing taxation would only cause hardship, it is clear that better management of expenditure is the key to success in implementing Our Plan.”
Government deficits in the past three years added some 10 percentage points to government debt, bringing it closely to the 40-per-cent level, considered the “upper limit” by the International Monetary Fund.
Mr. Francis said he did not think the daily services of the Government can continue unaffected without increases in Government expenditure.
“Here we have an absolute determination to hold back broad increase in Government expenditure and also an attempt to look at those particular areas around the Government services, which have not been subject to increases in recent times.”
Mr. Francis said the Government faces an economic environment which is not strong.
He said its revenue is largely tied to imports and that revenue is going to be under pressure, and there is going to be a look at how taxes which are not being paid can be collected.
The Government aim is to achieve a GFS (a macroeconomic system) deficit of not more than 2.2 per cent, compared with outturns of 3.2 per cent in 2001/02 and 3.3 per cent projected for 2002/03. A similar position is being pursued in the United States, where the Bush administration is seeking to reduce taxes.
By Lindsay Thompson, The Nassau Guardian
