PM declares ‘a new day’ as financial bills passed

Sweeping changes in how public finances and public debt are managed are expected now that parliamentarians passed a number of critical financial bills yesterday.

Prime Minister Dr. Hubert Minnis declared it was a new day while leading debate on the Public Finance Management Bill, 2021; Public Debt Management Bill, 2021; Statistics Bill, 2021 and Public Procurement Bill, 2020.

Pointing to new provisions introduced via the Public Financial Management Bill (PFM) to cover financial misconduct, financial offenses and institutional sanctions, Minnis said the law addresses “glaring weaknesses” that existed before.

“Unlike before, we will now have defined operational sanctions for unsound management and we will have criminal penalties for deliberate malfeasance in respect of the public funds. This is a new day. We cannot have accountability if there are not consequences for abuse of the public purse. This failure to articulate specific sanctions has been a glaring weakness of our existing framework,” he said while leading debate on the bills in the House of Assembly yesterday.

“We are now fixing it. Once again, it demonstrates that this side is not about pretty talk, but about effective action.”

Financial misconduct is listed with more than two dozen definitions which can result in criminal proceedings and up to five years imprisonment and/or a fine not exceeding $100,000 if convicted.

The PFM bill is also expected to articulate responsible and efficient frameworks for dealing with unforeseen budgetary needs that have either not been provided for, or have been inadequately provided for in the Appropriation Act.

“As contemplated, these will be addressed through a budgetary reserve appropriation (which allows for up to three percent of recurrent expenditure to be set aside under the budget of the Ministry of Finance); the constitutionally established contingencies fund; or through the standard supplementary appropriations bill process,” the prime minister said.

The PFM bill is also expected to enhance the government’s ability to govern cash planning and management activities; allow for the establishment and management of special funds; afford protection for trust assets that are segregated from public assets; and introduce more transparent and flexible arrangements for dealing with remissions, write-offs and settlements.

The prime minister said these provisions are intended to generate greater efficiency in government administrative processes, without sacrificing the accountability objective.

“Also notable is the insertion of new clauses on public investment management of public infrastructure projects (PIPs), which recognize The Bahamas’ vulnerability climate and disaster risk and the need to build resilience into the government’s physical assets, public infrastructure and services,” he said.

“Aside from the central government, it is intended that applicability will extend to those agencies and GBEs (government business entities) that ordinarily receive 50 percent or more of their operating budgets from the government.”

The prime minister also announced that the government is in the preliminary drafting stage of proposed auditor general legislation.

The bills were passed a week after the Inter-American Development Bank highlighted weaknesses in The Bahamas’ fiscal policies, governance, institutions, rules and processes, public financial management processes and public financial management in its latest publication on the region, titled “Economic Institutions for a Resilient Caribbean”.

Public debt
management

Considered equally critical for the management of public finances, the Public Debt Management (PDM) Bill is expected to ensure that the government’s financing needs and payment obligations are met on a timely basis and at the lowest possible cost, consistent with an acceptable level of risk, the prime minister said.

It is also expected to support the development of the government’s domestic securities market and to ensure consistency with fiscal sustainability goals.

Toward this end, the prime minister said a centralized debt office and the high-level advisory debt management committee would be created following the passage of the PDM bill.

“There is no shortage of global examples on the destabilizing effects of high debt levels on macroeconomic stability. Of course, maintaining macroeconomic stability is a key policy objective of any government. Therefore, it is important that our debt management framework ensures that the borrowing activities across the public sector spectrum conform with sound debt management principles and that there is an orderly access to debt markets by covered entities,” Minnis said.

“As currently reflected in the establishing legislation of most state-owned enterprises, the PDM bill contemplates that the minister of finance will be responsible for approving, in consultation with the responsible minister, all borrowings (whether guaranteed or non-guaranteed) of the covered public entities and GBEs. Furthermore, all covered entities will be required to undertake appropriate risk assessments of prospective debt transactions.”

Speaking to the Public Procurement Bill, the prime minister said the legislation seeks to address “many shortcomings” cited by international agencies regarding transparency and efficient market competition, as well as the absence of a legal framework and designated entity to oversee procurement processes, among other things.

“We are moving forward to modernize and transform the current arrangements,” he said.

“The Public Procurement Bill we have before us today is designed to promote economy and efficiency in the use of public funds, to conduct procurement in a fair and transparent manner and to support an increase in the number of small Bahamian-owned businesses involved in the public procurement space.”

Minnis said those bills, together with the Statistics Bill, which seeks to modernize and strengthen the existing statistical system to meet the increasing demand for data to support informed decision-making, are necessary and long overdue reforms that will take The Bahamas further along the continuum of improving and modernizing the country’s governance regime.

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