By NEIL HARTNELL
Tribune Business Editor
The Government was yesterday accused of “spending on testosterone” after it increased 2016-2017 recurrent expenditure estimates by $232.708 million in the mid-year Budget.
No explanation for the increase was forthcoming in the booklet that accompanied yesterday’s mid-year Budget statement by Prime Minister Perry Christie, with the majority of the increase - some $212.724 million or 91 per cent - allocated to ‘grants, fixed charges and special transactions’.
Of that $212.724 million, almost $146 million has gone to the Ministry of Finance and Treasury Department, again without any breakdown of where these funds are going.
The recurrent expenditure increase is equivalent to around 10 per cent of the initial 2016-2017 full-year Budget estimate of $2.321 billion, taking the new total to $2.553 billion.
With the Christie administration also increasing its capital spending estimates by $52.562 million, from $242.114 million to $294.676 million, the Government is adding more than $285 million in spending to its 2016-2017 Budget.
Given the Prime Minister’s confirmation yesterday that the Government will not hit its full-year revenue projection of $2.175 billion, the figures will likely cause concern that the increased spending will widen the deficit and further increase the $7 billion national debt.
While some of the increased spending may relate to Hurricane Matthew recovery efforts, the Government’s political opponents yesterday accused it of increasing expenditure to aid its re-election prospects.
K P Turnquest, the FNM’s finance spokesman, told Tribune Business that the Government has “an insatiable and terrible appetite for spending, especially when an election is coming up”.
He added: “They’re hiring people all over the place on three-month contracts, and engaging in construction contracts like crazy with no regard to what’s happening in the next quarter.”
And Rick Lowe, a ‘fiscal hawk’ and executive with the Nassau Institute think-tank, told Tribune Business: “I think they’re spending on testosterone.”
Concerns over the impact of this increased spending on the 2016-2017 deficit, which is already projected to overshoot the initial target by 250 per cent, will likely be exacerbated after total first half revenues came in 14.2 per cent below projection.
Mr Christie yesterday said total revenues for the six months to end-December 2016 were $856 million, some $142 million below the $998 million first-half projection, which he blamed on Hurricane Matthew.
Dissecting the reasons for this mixed forecast, the Prime Minister largely blamed Hurricane Matthew, which resulted in Customs duties missing projections by $30 million; Excise duties being off by $32 million; VAT dropping off by $27 million; real property tax falling by $47 million; and Business Licenses declining by $11 million against estimates.
Mr Christie said his “optimism” for a revenue rebound was based on performance during the first two months of this year, together with the much-publicised crackdown on ‘tax cheats’ that began in November 2016.
The Prime Minister said the latter initiative had yielded $31 million in extra, direct revenues to-date, with the total revenue impact equivalent to $62 million. Mr Christie added that the biggest chunk had come “from the deterrent effect” on Customs-related transactions.
“Since this time, we have experienced a significant recovery in revenue yield in the first two-and-a-half months of this year,” Mr Christie said of the Government’s revenue collections post-Matthew.
“Indeed, revenue collections for both January and February exceeded the previous year’s level by some $25 million and $26 million, or 17 per cent and 18 per cent, respectively.”
Acknowledging that Bahamians were “rightly” concerned about GDP growth rates that lag other countries in the Caribbean, the Prime Minister added that the $1.242 billion in recurrent spending in the 2016-2017 first half was equivalent to 54 per cent of the full-year estimate.
This represented a $158 million year-over-year increase, with capital spending also up over the prior year by $44 million at $135 million.
Suggesting that the Government had absorbed 50 per cent, or $300 million, of Hurricane Matthew’s $600 million impact, in its finances, Mr Christie said $35 million had been spent on direct relief, such as repairs to public buildings, home reconstruction and clean-up.
He added that 5,083 loans, totalling $31 million, had also been granted to public sector employees to assist with their post-Matthew recovery.
The Prime Minister said the Government had also invested $112.494 million to capitalise HoldingCo, the majority 51.75 per cent shareholder in Aliv, the new mobile operator, and to take up the entire Bank of the Bahamas rights issue.