The government of Prime Minister Perry Christie faces crucial budget preparatory days as it fights against the possible widening of the fiscal deficit and nagging revenue leakages.
On May 28, Mr. Christie, who is also Minister of Finance, will present his first real budget to parliament at a time when the United States economy continues to be sluggish, expenditure continues to outstrip revenue intake and demands for capital expenditure are mounting.
The first budget he brought to parliament last year was primarily the work of the Free National Movement Administration as the PLP came to power less than a month before the budget communication.
With all of the economic factors and considerations coming into play, the prime minister and his team face a balancing act of sorts.
A key architect of the new budget is Minister of State for Finance James Smith, who is not unaware of the monumental task faced by the government.
Minister Smith recently revealed that revenue shortfall was expected to be about $60 million at the end of this fiscal year.
In an interview with the Bahama Journal Wednesday, he indicated that the shortfall could be as much as $70 million.
“[There needs to be] increases in imports which can come about by increased visitor arrivals or increased foreign direct investment,” he said. “But that has to come in at a rate to keep pace with increased expenditure and hence you have a growing deficit.
“So I think that over the next 12 to 18 months, we’re going to have to try creative ways in keeping revenue buoyant to take care of the recurrent expenditure and also to try and keep a handle on increases in the deficit and having to resort to borrowing or increased debt to keep running the country.”
Shortly after coming to office last year, the government had to borrow $125 million to offset a shortfall in projected revenue.
The International Monetary Fund recently warned the government that failure to put in place corrective measures could lead to a widening of the fiscal deficit to $180 million in fiscal year 2003-2004. But Prime Minister Christie said recently that he was confident that the government would be able to avoid this from happening.
He said one of the major challenges facing his government is carrying out key infrastructural improvements throughout the Bahama Islands.
To this end, he indicated that the government is committed to creating the adequate balance between the granting of concessions to investors and the spending of millions of dollars on infrastructure upgrades.
Leading the implementation of a number of projects in the islands is Works and Utilities Minister Bradley Roberts, who said in an interview with the Journal Wednesday that much of the promises made by the PLP Government will be reflected in the new budget in two weeks.
“The budget is going to be focused to reflect the PLP’s plan,” he said. “There is no doubt about that whatsoever. The primary focus is going to be in job creation.”
Minister Roberts said a significant challenge for the government is providing potable water on New Providence and in the Family Islands.
“We must expend serious sums of money to replace the worn out water mains here on the island of New Providence,” Minister Roberts said. “The figure still has to be quantified, but we’re looking at $15 million to $20 million. In achieving that, the present level of water production would be adequate because we would be able to eliminate all of that wastage.”
But there is much more facing the PLP Government in terms of capital projects.
For instance, there is the need for the improvement of roadways in New Providence and other islands.
The Glass Window Bridge in Eleuthera is also another challenge. There are also bridges in Andros that have to be replaced or extensively renovated.
There is a long list of other commitments the government must fulfil as well.
Officials reiterated that improving revenue collection is critical to ensuring that the country moves closer to balancing its expenditure and revenue intake.
By Candia Dames, The Bahama Journal
