‘$1 billion disparity’

The Minnis administration did not account for $1 billion in liabilities in its Pre-Election Economic and Fiscal Update Report, Prime Minister Philip Brave Davis revealed during the supplementary budget communication in the House of Assembly yesterday, claiming there was a disparity in what was reported and the truth.

Davis, who also serves as minister of finance, said he requested a full accounting of the government’s fiscal position after he came to office last month.

As a result, according to the prime minister, a renowned accounting firm has been reviewing information that was provided by the Ministry of Finance with respect to the liabilities of the government as of September 30, 2021, which is approximately one month after the issuance of the pre-election report.

“Madam Speaker, the numbers provided by the Ministry of Finance for the period ending September 30, 2021, reveal a $1 billion difference from the numbers provided by the previous government in their pre-election report,” Davis said in his first communication as finance minister.

“I want to repeat that to be sure everyone hears it – there is a $1 billion difference between the numbers provided by the previous government prior to the election and the truth. It is painfully clear that the pre-election report was an incomplete presentation of the government’s contingent and real liabilities.

“For example, it excluded over $100 million of contracts executed by the Ministry of Works, for which no funding has been provided in the budget.”

However, the expenditure estimates tabled show no appreciable addition to the Ministry of Works’ budget.

“It omits under-funding of pension and gratuity payments for public officers, which is now being addressed in this supplementary budget,” the prime minister continued.

“The pre-election report omitted a loan assumed by the government for which the only source of payment is BPL, an entity with significant financial challenges.”

The prime minister also said the pre-election report “excludes amounts owing for taxes for a star witness in a criminal case of a former Cabinet minister”.

“This very unusual arrangement is supported by a promissory note signed by a senior official of the Ministry of Finance,” he said.

“It excludes court judgements made against the government, for which funding now has to be provided in this supplemental budget.”

Davis said the report also “makes no mention of potential liabilities emanating from contract breaches committed by the former administration”.

“Once I have the final report, it will be presented to the House, but suffice to say not all of these obligations can be accommodated within the existing framework.

“The important thing is that many of these entities are satisfied that our government firstly acknowledges that funds are owed and secondly is committed to resolving these matters in an amicable manner.”

The Fiscal Responsibility Act requires that a pre-election update report be published no later than 20 business days of the general election and details what should be included in the report.

The act mandates that the report detail updated fiscal information including government revenue outturn and forecasts for the current year and next three years; government expenditure; approval of new spending since the annual budget including contracts and service projects and policies; net and gross debt for the current year and next three years; and other significant financing matters that occurred or are planned.

It mandates several other items as well.

Davis said that he “will leave it to the Bahamian people to judge whether a $1 billion difference between the report and the reality reflected an honest and true commitment to fiscal transparency”.

“Let me be clear,” the prime minister said, “the era of mismanagement, shoddy fiscal discipline, and indecisive governance is over.

“We are going to share with the Bahamian people what we have learned about the choices made by the previous government – after all, these were choices made in their name. But we will not waste valuable time or energy rehashing in great detail their sins of commission and omission.”

This supplementary budget has an effective date of October 1, 2021.

Davis said it will “bring our government’s budget in line with our vision for progress, and will not increase the national debt more than forecasted in the May 2021 budget presentation”.

The revenue and expenditure estimates are not significantly different than those passed in June.

There is an extra $92 million forecast to bring the revenue estimate to $2.34 billion.

There are less than a million dollars shaved off total expenditure to keep the figure at roughly $3.19 billion.

Former Prime Minister and Minister of Finance Dr. Hubert Minnis, who now leads the opposition, called Davis’ comments “reckless and dangerous” during a press conference after the House broke.

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