May 24, 2023

Bahamas outlines new initiatives to maintain economic growth

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Lucaya-Erosion-CNTFrom Caribbean360

image Addressing the Bahamas Business Outlook on Monday, Christie said 18 months into his administration, it has had to deal with strengthening the economy, increase jobs, address social ills including poverty and crime.

NASSAU, Bahamas, Thursday January 16, 2014, CMC – Prime Minister Perry Christie says the task of maintaining the local economy has become a “daunting” task in light of the slow and recovering global economy.

Addressing the Bahamas Business Outlook on Monday, Christie said 18 months into his administration, it has had to deal with strengthening the economy, increase jobs, address social ills including poverty and crime.

“This task has been a daunting one within the context of a still slow, although recovering U.S. economy, a sluggish European economy, and a lingering international recession except most notably in China.  We are encouraged by reports of projected strengthening of the economies of major developed countries,’ Christie told the conference organized by The Counsellors.

He told the delegates that “these adverse external economic conditions have been particularly impactful upon three major components of our economy, tourism, financial services and international shipping.

The Bahamas Business Outlook is being held under the theme “Charting The Course For Growth In 2014”.

Prime Minister Christie told the conference that in order to maximize economic growth here the government would soon be appointing a National Economic Council “to keep the economy under constant review and to advise the Government on ways to grow and sustain the economy and to provide greater economic opportunities for Bahamians”.

He said the Caribbean region has, in many ways, been an example of the great successes that can be achieved by small open economies through the efficient management of its often limited resources. But he noted the similarities of their economies can also serve as a cautionary tale as to what can happen if they were not careful to avoid common pitfalls.

“So while The Bahamas has often stood out in the region as a leader in key indicators, such as our high (gross domestic product) GDP per capita, comparatively lower debt-to-GDP ratios and sound legislative framework, as we have seen, this situation can very quickly unravel if we are not careful.

“We have to manage our economy carefully to guarantee that our legacy of fiscal prudence and economic growth continues far into the future.  To do so means that we have to deliver on comprehensive reforms in public finances that reinforce expenditure discipline, and significantly improve the government’s revenue collection.  In doing this we have to ensure that the private sector is brought along as the principal engine of growth.”

Christie said that the government has established for itself a target of gradually reducing total spending relative to the size of the economy over the next few years. “Nevertheless our priorities in important areas such as education, health, national security, poverty alleviation will not be diminished. Neither can we divert our attention from infrastructure needs which are still acute.”

He said public private partnerships would also provide significant scope to satisfy the infrastructure needs of development without the commensurate increase in government debt.

“This is the model we are adopting for Family Island tourism development and it underlines the outcome that the Government expects from the reform of the energy sector in the Bahamas.

“Another critical focus you will see emerge is an approach to bringing private capital to bear on the rehabilitation of old and dilapidated government buildings. This would reverse the trend of increasing expenses on rent and restore government buildings to use.”

He said the fiscal consolidation must also address government revenue collection.

“The estimates by the Ministry of Finance are that, in order to begin to see a sustained repayment in the government’s debt, even as expenditure discipline is achieved, we need to be at a position three years from now where the Government’s annual revenue intake is at least US$500 million higher.”

Prime Minister Christie said the strategy to do this would be multi-pronged.

“In the current year’s budget, we expect to improve revenue collection by at least US$100 million.  As the economy becomes more buoyant over the next few years the expansion in the tax base will also contribute to important revenue improvements,” he said, adding that in some areas fees and charges for some government services still remain to be adjusted, and these would have a modest impact on collections.

But he insisted that strengthening the existing revenue administration would be critical and that his government has already embarked on a modernization process for real property tax administration that will allow it “to clean up the tax register, and apply more modern and equitable methods of property valuations that would eliminate disparities in property tax bills and permit more orderly year on year adjustment in real property tax assessments.

“In line with the modernization of the business licensing administration, we will be moving to introduce, and where necessary strengthen protocols to allow for the exchange of information between public agencies, to monitor and enforce the collection of taxes, and to comprehensively monitor tax obligations.”

He said the modernisation of the Customs was progressing steadily, “as we are now at the stage, because of electronic submission of declarations to reduce manual interventions that give way more readily to fraud and errors in revenue collection.

Prime Minister Christie said that the proposals to reform the value added tax (VAT) have been informed by detailed and comprehensive studies on the impact of tax reform by the International Monetary Fund (IMF) and the Inter American Development Bank (IDB).

“We continue to study alternative proposals and my government has commissioned a final study on the issue which will address all the issues, concerns and alternative recommendations.   Our objective is to have a system that provides adequate revenue for modern governance while providing economic growth, transparency and efficiency.

“We continue to listen to alternative proposals that will achieve objectives. The government is, and will remain engaged with all stakeholder groups and is intensifying its focus on both business and consumer education.”

Prime Minister Christie said that it is clearly not the best interest of government, the business community, nor the people of The Bahamas to have a taxation system that leads to economic slowdown and loss of jobs.

“My government will work assiduously to avoid any such development. We are more likely to have a positive outcome by working together than against each other,” he said, noting also that his administration would continue to develop a comprehensive set of strategies to combat crime and the fear of crime.

He said discussions have been held with various stakeholders.

“We are committed to providing the necessary resources, both human and capital, in support of our plan of action.  We urge all Bahamians to become involved in promoting the safety and security of The Bahamas.

We have also provided additional resources for the early completion of additional criminal courts for the purpose of ensuring that criminal trials take place within a reasonable period of time,” he told the conference.

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