NASSAU, BAHAMAS—The government must now shift to a seamless mode of implementing its revenue-enhancing initiatives to meet its 25% revenue-to-GDP target, a governance reformer said yesterday, while noting that the window of success is “extremely narrow”.
Hubert Edwards, head of the economic committee of the Organization for Accountable Governance (ORG), was commenting on the Department of Finance’s press release on the government’s efforts to meet the revenue target by 2025/2026.
He said: “Regardless of how recent conversations have been framed, the fundamental issue facing the Bahamas is the extent to which it is able to generate sufficient revenue to meet its obligations. This paper from the Ministry of Finance (MoF) gets to the heart of that finding and should go a long way to allay some concerns. More specifically, the document is likely to have a positive impact on the credit market, mainly due to the underlying reforms suggested.
Edwards said: “In my view, by outlining firm initiatives, quantifying the impact together and detailing a number of crucial administrative and legislative reforms, the Department of Finance has sent a clear signal of commitment while seeking to reassure the reasonableness of its revenue projections, and by extension, the veracity of the projected deficit trend through 2025/26. This is fundamental for the short and medium term fortunes of the country and is therefore a big positive.
Edwards noted that pursuing the 25% revenue-to-GDP target is imperative for the country’s economic future.
“The document accurately conveys a sense of urgency while highlighting the implications of not being able to improve tax revenue. In that regard, it should prove extremely helpful in changing the nature of debt conversations and instilling greater trust,” he continued.
“Taking into consideration that the document was completed in March, one would expect these results to begin to materialize over the next six months or so. Re-establishment of the Revenue Policy Committee and the Unit improvement, strengthening of the DIR, initiatives, etc. are very clear initiatives and reiterate the discussions of the presentation of the budget and the report on the budgetary strategy.Overall, a few seem more speculative in nature. , but this, in my view, did not significantly diminish the value of the presentation given the claimed ease of implementation,” Edwards said.
According to Edwards, the Davis administration must now “move to a transparent implementation mode.”
“The window for success is extremely narrow, but there seem to be reasonable possibilities. While the ultimate goal is to reach 25%, achieving the deficit reduction trajectory, as foreseen in the 2022/23 budget, is fundamental to the desired impact of the plans. The Department of Finance is to be commended for responding so comprehensively and we look forward to and anticipate positive results over the coming months,” Edwards said.