Presenting the 2011/2012 National Budget Communication to Parliament yesterday, Prime Minister the Rt. Hon. H.A. Ingraham pointed to the fact that by such mechanisms governments translate their vision of the future into concrete policies and initiatives that will bring about the societal objectives and outcomes that are of paramount importance to citizens. He maintained that his Government, over the course of its three terms in Office, has been consistent in its pursuit of effective Budgets that meet the needs of Bahamian society.
Looking at the two previous Budgets, the Prime Minister noted that in the 2009/10 Budget, the Government chose a balanced medium-term strategy designed to maintain employment and living standards to the extent possible; to continue the infrastructure investment thrust which also supports employment; and to target a restoration of the fiscal headroom as and when conditions permit. The following year, with the early signs of global economic recovery beginning to emerge, the Government made a commitment to a renewed focus on redressing public finances, containing the debt-to-GDP ratio immediately and getting that ratio to more prudent and desirable levels over the medium term.
The 2010/11 Budget contained the most significant structural fiscal action of any Budget in recent years as a means of immediately containing the debt-to-GDP ratio. A recurring theme across the Budgets has been a steadfast commitment to fiscal prudence, modernizing and improving public services, strengthening transparency and governance, streamlining the domestic business environment and enhancing the efficiency and effectiveness of revenue administration and collection. “We have pursued those core objectives through a variety of policies and initiatives,” he asserted.
Given that the prospects for a robust and much-desired rebound in employment “remain muted” in the near term, Prime Minister Ingraham said the Government was of the view that a core priority for the 2011/2012 National Budget “must be action to enhance the skills and job readiness of unemployed persons and encourage, in the short term, job creation by the private sector.” A National Job Promotion Strategy therefore is being put in place, including A National Job Readiness and Training Programme; A Work Placement and Employment Exposure Programme; A Jump Start Programme; and A Public Service Employment and Training Initiative. Other programmes support the Development of Small and Medium Size Enterprises; Better Public Service Through E-Government; and Enhancing the Resiliency of the Financial Services Sector.
The Bahamian Economy
The Bahamian economy is estimated to have grown by 1 per cent in real terms in 2010, following consecutive declines of 1.3 per cent and 5.4 per cent in 2008 and 2009, respectively. Prime Minister Ingraham noted that this improvement was predominately linked to ongoing recovery trends in tourism output. The tourism sector continued to strengthen last year as arrivals built a 13 per cent gain on top of the previous year’s 5.7 per cent growth, to reach 5.2 million visitors. That growth was most pronounced in the sea segment with air arrivals expanding by a more modest 3.4 percent, though that was a marked improvement from the 10 per cent contraction in 2009.
As part of the budget communication, an extensive report was presented on recent performance, both in the aggregate and for the major sectors.
The Government estimates that prospective evolution of the Bahamian economy will be shaped by the global and U.S. outlook; modest economic expansion in the U.S., in conjunction with gradual reductions in the rate of unemployment, will provide some measure of stimulus to the growth of the domestic economy. A more significant boost to activity and employment will come from the very buoyant level of investment that is underway, in both the public and private sectors. Key projects include the continuation of the LPIA development, the startup of the Baha Mar project, the Port at Arawak Cay, Albany, Kerzner International, BORCO, Statoil, other stalled projects and a number of small tourism investments. In this connection, the Government continues to project real growth of the domestic economy on the order of 2 per cent in 2011. The rate of growth is expected to firm further in 2012, to somewhat in excess of 2.5 per cent.
The 2011/2012 budget projects Recurrent Revenue to come in at 18.5 per cent of GDP; that is, some $1,514 million. Capital Revenue is expected to make a further contribution again next year, to the tune of $132 million. Recurrent Expenditure is being held to $1,680 million, up by $36 million from its level in 2010/11. The GFS Deficit in 2011/12 is projected at $248 million, or 3.0 per cent of GDP. That is down significantly from the 5.5 per cent of GDP recorded in 2009/10 and the 4.5 per cent in 2008/09, in the midst of the global recession. Government Debt is forecast to stand at $3.779 billion, or 46.2 per cent of GDP, at the end of the upcoming fiscal year.