Bahamas fiscal deficit deepens 22 percent to $216m
The first half of fiscal year 2010/2011 showed a $38.9 million increase in the Bahamas government’s deficit, expanding 22 percent to $215.9 million year-over-year.
According to the Central Bank of The Bahamas’ January Monthly Economic and Financial Developments report, the decreased expenditure of $16.5 million, or 2 percent, was insufficient to offset the fall-off in total receipts of $55.4 million, or 8.8 percent.
Total receipts for the July to December 2010 period came in at $573.5 million and despite the aggregate decline year-over-year, its largest component -- tax receipts -- showed a slight increase of 1.5 percent, up to $507 million. The report credited a 6.5 percent gain in the international trade taxes classification, which includes import taxes, stamp taxes on imports, excise taxes, export taxes and stamp taxes on exports.
Selective taxes on services, the classification that gaming and hotel occupancy taxes fall under, were up 40.9 percent for the period. The amount of this contribution was small, coming in around $6.4 million according to the prime minister’s recent mid-year budget statement to Parliament. He credited the increase in the room tax rate for the increase, which Guardian Business has learned was about $2 million.
The overall decrease in receipts for the period came from the “Miscellaneous” sources classification, which saw a 76.5 percent reduction from the previous period’s mid-year position. The 2009/2010 position included $64 million in stamp duty from the South Riding Point, Grand Bahama, sale to Statoil.
But one-offs for this fiscal year are likely to more than make up the number in the miscellaneous category over the next few months. The sale of the Bahamas Oil Refining Company (BORCO) in January is estimated to bring over $60 million in stamp revenues, for example. Real estate and mortgage transactions from the Baha Mar deal, and the sale of the governments’ BTC position for $210 million along with the $7 million stamp duty on that deal, should further boost total receipts.
Aggregate expenditure came in at $789.4 million for the period, down $16.5 million or 2 percent year-on-year. The reduction was due to a drop of around 66 percent in net lending to public sector entities, according to the report.
Recurrent expenditure, the largest contributor to aggregate expenditure, was up 3.18 percent to $687.1 million, influenced by an 11.5 percent increase in the purchases of goods and services, and a 5.8 percent increase in transfer payments. Outlays for infrastructure decreased for the period, resulting in a $0.5 million capital spending reduction and bringing that total to $79.9 million.
