$164 Million Deficit Projected
By Candia Dames
The 2004-2005 budget projects a budget deficit of $164 million, a notable increase from the $122 million projected last year.
The $164 million deficit would be 2.9 percent of GDP. The $122 million that was forecast last year would have been 2.2 percent of GDP.
Prime Minister and Minister of Finance Perry Christie, who made his budget communication in the House of Assembly Wednesday, said the deficit of 2.9 percent is about the same as the projected outturn for 2003/2004.
“This level of deficit is reasonable in view of the fact that the economy is on the threshold of expanding,” Mr. Christie said, “and, therefore, it would not make sense to deflate the economy at this time.
The prime minister said the government is still targeting a lower deficit than that realized in the years 2001/2002 and 2002/2003.
Mr. Christie noted that in 2001/2002, under the previous administration, the deficit reached 4.1 percent and in 2002/2003, the deficit reached 3.5 percent. He pointed out that that was also in large part due to the fiscal policy of the previous administration, which had prepared much of the budget before the May 2, 2002 general election.
He said the projected deficit is “clearly an improvement over the previous years, demonstrating this government’s commitment to economic and fiscal prudence.”
The prime minister also reported that the continuing weakness of the global economy resulted in revenue targets not being attainable.
The 2003/2004 budget envisaged the introduction of a Flight Information Region, meaning that the government intended to take full control of the country’s airspace from the Americans.
As a result, the Bahamas air traffic control system would have been able to collect significant fees of between $40 million and $50 million to go mainly toward airport upgrades.
“The US authorities, who presently manage our airspace, had no objection in principle to the proposal, but were concerned with implications for Homeland Security,” Mr. Christie said.
Following constructive discussions with those authorities, it was agreed that instead of implementing the FIR, the US would continue to manage the airspace on security grounds, he said.
Mr. Christie added that the fees collected will be provided to Bahamian authorities and in this way the government’s intensions will be realized.
“The fact that the project did not proceed in 2003/2004 because of the external complications to which I have referred inevitably reduced revenue.
The government also expected to collect revenue from the sale of 49 percent of the shares in the Bahamas Telecommunications Company, but that too did not materialize during the fiscal year.
“The recent termination of the privatisation process does not mean that my government has abandoned the privatisation of BTC,” he assured. “On the contrary, the privatisation of BTC remains an important item of my government’s economic agenda.
“Accordingly, the privatisation will be re-launched as soon as circumstances reasonably allow and on a basis, moreover, that will take adequate account of the lessons that were learned in the earlier process.”