The focus of the government in preparing the 2003-2004 budget has been to avoid the widening of the fiscal deficit, while cutting down on revenue leakages, according to one government official.
Despite the government’s tough challenges ahead to restrain spending and enhance revenue intake, it is committed to ensuring that the fundamentals are adequately funded, Parliamentary Secretary in the Ministry of Finance Michael Halkitis indicated Tuesday.
Once again, education and health will receive the highest budgetary allocations, followed closely by national security, he revealed.
Mr. Halkitis said in an interview with the Bahama Journal that the greatest challenge the government faced in crafting its first “real” budget since assuming office is to shrink the country’s fiscal deficit at a time when global economic conditions are less than favourable.
“The government has taken the stance that we need to be very prudent,” said Mr. Halkitis, echoing the sentiments of Prime Minister Perry Christie, State Minister for Finance James Smith and other high-ranking government officials.
“As far as we can, we have to constrain spending and look for ways to save money, which is not easy, considering that 80 percent of our budget is fixed, a situation that does not allow much flexibility,” he said. “And we don’t want to create a situation where we would have to add exorbitant taxes that will burden the Bahamian people.”
Minister Smith pointed out recently that the rigidity of government expenditure poses a significant challenge and he expressed concerns that the level of concessions granted under various economic incentives legislation is far too high.
The International Monetary Fund (IMF) recently warned the government that failure to implement corrective measures could have the adverse affect of increasing the country’s fiscal deficit to $180 million during the period 2003/2004.
But this is something the prime minister has said he is confident that the government would be able to avoid.
Minister Smith, meanwhile, has said that the government must look at its system of revenue intake with an eventual re-examination of its tax structure.
Given the fact that government officials expect a $60 million or $70 million revenue shortfall at the end of the 2002-2003 fiscal year, many people are fearful that new taxes could emerge in the new budget.
But Brent Symonette, opposition whip in the House of Assembly, is hopeful that the new budget would not include new taxes.
Mr. Symonette, who spoke to the Bahama Journal Tuesday, said he also hopes that the government maintains key programmes left in place by the Free National Movement Administration, including repairs to roads and sidewalks along with other capital improvements and the clean-up of downtown Nassau.
“The government had $10 million which they placed in their budget last year, carrying out programmes under what they called Our Plan, and we want to see what money has been spent out of that and what it has been spent on because we haven’t seen anything out of this,” Mr. Symonette said.
The Montagu MP said the FNM hopes that if there have been genuine tax revenue decline due to low imports, the government would be prudent enough to properly reallocate budgetary funds.
But for now, he said, the Opposition will simply wait and see what will be accomplished.
Independent Member of Parliament Pierre Dupuch, who recognized the government’s financial woes, said while the 2003-2004 budget presents the government with the added opportunity to deliver on key promises it made during its election campaign, it also presents a tremendous challenge.
“They are going to run into problems with money in doing everything they hoped to, simply because the economy is bad, brought on firstly by what I considered the unfortunate mistake of the Free National Movement passing a foolish package of financial sector laws and the debt it left in place,” Mr. Dupuch said. “They have to live with this, in addition to the ramifications of 9/11 and the Iraqi war.”
Mr. Dupuch added, however, that instead of “crying the blues” over something it cannot control, the government must now move and determine what it will do to ensure that more of the money spent in The Bahamas stays here.
“The real secret to their success would now be their ability to keep more money in the country,” Mr. Dupuch said.
Mr. Dupuch pointed out that the government can change this present situation around it would very quickly make up for any downfall that may be experienced because of any bad economy.
“I believe in the old saying that when the going gets tough, the tough gets going,” he said. “I don’t think any challenge is insurmountable.
“One simply has to recognize that there is challenge and do something about it.”
By Macushla Pinder, The Bahama Journal
