S10 EP18 DRIVING PROGRESS INSIDE THE 2026 2027 BUDGET

追加: 2026-05-31

[00:00:00][snorts] >> The fiscal numbers painted a striking picture, a projected fiscal surplus of $223 million, a debt-to-GDP ratio on a downward trajectory toward 59.9% and a massive policy announcement, the total acquisition of the Grand Bahama Power Company.

[00:00:23]The budget that builds on progress. This communication arrives just 2 weeks after the administration led by Prime Minister Philip Davis secured a renewed mandate from the Bohemian people in the May 12th general elections.

[00:00:47]>> [music] >> On Wednesday, May 27th, the Minister of Finance, Michael Halkitis, stood before the Honorable House of Assembly [music] to present the fiscal year 2026-2027 budget communication. But behind the macroeconomics are the everyday realities of Bohemian families wrestling with global inflation, high energy costs, and infrastructural [music] gaps. Tonight, we dissect this $4.4 billion revenue plan with a microeconomist.

[00:01:44]Our discussion begins on the other side of this break.

[00:02:25]>> Welcome to On the Record. Our topic tonight, driving progress inside the 2026-2027 [music] budget. My guest is macroeconomist Therese Turner-Jones, macroeconomist that is, pardon me. Therese Turner-Jones, CEO of Maxquinn Limited, economic and strategy consultancy, whose extensive background spans senior roles at the IMF, IDB, and CDB. Welcome back to the show.

[00:02:51]>> Thank you, Jerome.

[00:02:52]>> We had an opportunity to talk months ago, and I always said, "I got to get her back on." Um, and this is the perfect opportunity. On Wednesday, it was an important day for the Davis administration. The budget presentation helps us to understand the government's fiscal priorities. The message from Parliament is that the country remains on track to achieve a surplus. The day started with the Prime Minister entering Parliament with the red briefcase, with a newly minted Finance Minister Michael Halkitis delivering the presentation.

[00:03:25]Our Joshua Williams was there and breaks down the numbers.

[00:03:28]>> Finance Minister Michael Halkitis not only giving the government's financial projections for the upcoming fiscal year, but reaffirming claims that the Davis administration is on track for a surplus for the fiscal year that ends June 30th of this year. Before the presentation got underway, a long-standing tradition continued.

[00:03:47]Members of the Davis administration walking into Parliament with the red briefcase containing the national budget. And a major focus of this year's presentation, the government's projected surplus. According to Alkidis, he says the numbers backed it up. Figures from July 2025 to March 2026 show government collected $2.5 billion in revenue, equivalent to 65.3% of the full year budget target, a 3% increase compared to the same period last year. Tax revenue totaled $2.3 billion with value-added tax receipts reaching $1.1 billion while gaming taxes generated $30.9 million among other sources of revenue.

[00:04:28]>> This outturn points to a generally stable position in revenue, although performance across individual revenue categories was mixed.

[00:04:36]>> That mixed performance refers to decreases in property taxes collected, financial and capital transactions, and international and trade transactions.

[00:04:45]Now, looking at expenditure last, government spent $2.7 billion of that amount and $2.4 billion went toward recurring expenditure, while capital expenditure totaled $271.7 million. Payments on public debt reached $452 million, a 1% increase year-over-year.

[00:05:04]>> This level of expenditure remained broadly consistent with the normal execution of the budget.

[00:05:11]It also reflects the government's ongoing obligations in relation to public service delivery, debt servicing, and the implementation of programs for our ties throughout the year.

[00:05:23]>> The deficit stood at $157.5 million by the end of March 2026 or 0.9% of GDP.

[00:05:30]However, government still reported a primary surplus of $294.5 million. And then there's the national debt. Central government debt now stands at $12.5 billion, external debt at $5.4 billion, while domestic debt totaled $7.1 billion, gross borrowings during the 9 months in the fiscal year amounted to $2.5 billion, while our debt repayments totaled $1.8 billion. And looking ahead to the upcoming fiscal year, government is projecting total revenue of $4.4 billion with expenditure estimated at $4.1 billion. The finance minister calling it a lower surplus year. Now, debate on the budget is expected to begin when the house returns on June 8th. Reporting for Our News, Wiliams.

[00:06:18]>> All right, thank you very much, Josh, for putting it into perspective for us.

[00:06:21]Therese, I want the audience to understand first of all the importance of a budget, the country's budget. We all seemingly live by a budget, but when you talk about a national budget, why is this important and what are the things that we should be looking for as as as Joe Public?

[00:06:37]>> So, it's important because we get an understanding of where the emphasis is going to be for the government. So, the priorities it sees as important.

[00:06:47]We're going to go into lots of details, but you'll see that there are some pillars that the minister outlined that would be important for this administration to focus on. Social development, modernization of the economy, and so on.

[00:07:02]Ease of doing business, all of those things are extremely important. So, it gives us some insight as to where we can look for changes, and certainly where we're going to look for focus. Um things I look for, Jerome, would be what's the level of investment spending or capital spending the budget versus recurring expenditures? Because as he explained in the speech, there's not a lot of leeway on the recurring budget because people are the civil service is a certain size, so those salaries have to be paid.

[00:07:34]Um interest payments have to be paid. We call those two items rigid expenditures because you can't change those overnight. Because the government's not going to fire anybody overnight. The government has to meet its debt obligations because then our credit rating becomes in question.

[00:07:51]So, that those two items alone tend to gobble up the bulk of what needs to be paid out of every government's budget. So, you look at that, then you look at what's left over. What's left over is not a heck of a lot on the recurrent side.

[00:08:07]And then you look at what they have what what's anticipated on capital spending. So, investments in new schools, in new hospitals, in new roads, airports, the kinds of infrastructure development we need to make sure the productivity levels that we need as a country can be accommodated. So, this is what I'm hoping we can delve into a little bit later on, but these are the important pieces of the budget that are important. But, for the average person watching this, you're listening out for is there something in it for me? If I'm a young person, did I find anything very appealing? Were there any tax breaks for for my uh small business?

[00:08:46]Um is the ease of doing business really going to help me open up my business faster? Um if I'm an older person, for example, are there any tax breaks there for me? There was something mentioned about uh work permit fees for elderly care.

[00:09:02]That's a really good idea, but you also have to include people who are dealing with kids with disabilities. I would include them in that same category. He didn't mention that specifically, but I'm hoping that they will extend it to that category as well, cuz that's really important for people who are struggling, especially if you're a single uh parent who you may have an elderly at home, you may have a disabled child. So, those kinds of things I'm looking for. If I'm an investor, I'm looking for what are those new taxes in there that may deter me from from investing in the Bahamas.

[00:09:33]I'm also looking at is this budget balanced in a way that next year there may not be tax increases? So, as an investor, I want to know I want to be predictable about the environment I'm going to be investing in. So, all those things I think people heard more or less last night.

[00:09:53]>> The minister announced a total revenue estimate of 4.4 billion and a total expenditure of 4.1 billion yielding a projected fiscal surplus of 223.1 million. Given your uh background in analyzing national accounts and structural adjustments across the region for the IMF, IDB, how realistic are these projections considering the global headwinds noted even in his communication?

[00:10:20]>> Right. So, he he was very clear that headwinds are not in our favor, right?

[00:10:26]So, the continuation of the war in Iran could keep oil prices pretty elevated.

[00:10:32]The US economy, while it's it's growing at faster than we would anticipated, but the overall economic outlook for the global economy has consistently been downgraded by the IMF throughout this year. So, um we we begin to see whether that's having any impact on our tourism numbers, and I would pay attention to the tourism arrivals for stopovers, not the cruise visitors, because those are the ones who basically spend a fraction of what a stopover visitor spends. You know, the data on that from the Central Bank is kind of dated, 2022, but an average stopover visitor spends about $2,600 per stay versus a cruise visitor that spends only $98 per stay. So, that's why we need 10 million of them >> Mhm.

[00:11:20]>> to spend in order to make up for the fact that on our stopover arrivals, that number has been relatively flat for a very long time. And the reason for that is we haven't had a whole lot of investment in new hotel accommodation especially for New Providence. So, I think that's what we need to look out for. I think us you know, forecasting a surplus today is is mathematics from the Ministry of Finance perspective.

[00:11:51]What I think we need to look at when the end of the 2025 2026 fiscal year ends which would be the end of June, we will be in a better position to see whether even the surplus that was projected for the current fiscal year materializes.

[00:12:12]The closer we get to to June, I think we're going to be already that number is much lower than it was anticipated. 70 million now versus 75 million earlier.

[00:12:23]So, it could be that that number is shaved off even even lower.

[00:12:28]We also don't know the impact of the VAT exemptions since April 1st on unprepared foods. So, that number has to be factored in. It could very well be that the officials at at Finance have already done that, but I think there are lots of things we want to look out for in the final >> Final numbers.

[00:12:45]>> actual numbers for the current fiscal year and then that's the base on which you can start really talking about what we're going to project for next year.

[00:12:53]>> Global growth is moderating at 3.1% for 2026 driven by persistent will be called geopolitical conflicts, energy volatility, tighter financial conditions. As a small highly open economy, we have how acutely vulnerable is the Bahamas to these external trade shocks and even ongoing tariff disputes?

[00:13:18]>> Extremely vulnerable. First of all, we import everything.

[00:13:22]But our major import uh bill uh what is very concerning is energy prices. So, the way you analyze the competitiveness of any economy is how inexpensive it is to do business there.

[00:13:39]And part of that cost is the cost of electricity. So, in our hotel industry, for example, 25% of the cost of um hotel operations is energy cost. And as soon as oil prices start to rise, that's an immediate kickback there.

[00:13:57]Flights to get to the Bahamas become more expensive. Um and not to mention that our transport costs at the pump, at gas stations, whatever we need to do, becomes more expensive because we don't do anything without electricity, right? Even water, to be able to get water in our pipes, we need electricity to do that. So, we have to be extremely conscious of the fact that when there is an increase in oil prices anywhere, it has a knock-on effect that could be extremely negative to the growth of the economy. We see that even, you know, flowing through to food prices. That's the another immediate uh impact is you see food prices increasing because the food has to get here from our suppliers that are abroad.

[00:14:40]>> We've got to truck it to where it needs to go.

[00:14:43]>> So, it's just everywhere. Um the tariffs you mentioned, of course, that's been the major uh punch to the increase in in in our inflation and prices. So, the minister mentioned that international taxes were down in terms of the revenue. That He said it was a mixed picture on the revenue side.

[00:15:05]VAT's doing very well, but international taxes are down. International taxes may be down because people may be importing less.

[00:15:12]All right? Because the more we bring in from abroad, then you pay there tariffs attached to that. And it goes to the budget. So, that could be one indicator.

[00:15:21]But absent seeing the trade data, so we know exactly whether the imports are down or not, and connect that to the the loss in revenue on on tariff side.

[00:15:31]Um, VAT, because VAT is when a Bohemian spends on everything now, whether it's professional services or items in the supermarket or things we buy here, as soon as we spend, there is the collection of of the VAT. So, it's a robust and this is why it's a very efficient tax, right?

[00:15:50]And robust and it's one of the taxes that, you know, over 180 countries around the world have imposed because it's easy to collect, it's easy to administer.

[00:16:01]And we see the benefit of that in in our own budget. 40 over 45 43% of the revenue comes from from VAT.

[00:16:10]>> Looking closer to the revenue side, the minister credited a brand new revenue stream um, for bracing, I guess as he called it, this budget. The domestic minimum top-up act So, the domestic minimum top-up tax act. It targets large multinational corporations to ensure a 15% minimum tax rate. That's expected to pull in at least 138 million this June.

[00:16:36]Is this a sustainable pillar for domestic revenue?

[00:16:41]>> So, again, I found it kind of confusing in the speech because he mentioned that initially they were only they could only identify five taxpayers that would fall in this category. 138 million is a very small number relative to the over 1.something or 2 billion or I forget the number on the VAT.

[00:17:00]VAT collections in the billions, this is in the millions.

[00:17:04]So, I think it's a good addition, but it's not going to close any considerable gap.

[00:17:10]>> I Well, when I looked at that number, I thought 130 million >> It's not a big deal. It's not a big deal. Think about what that number of accrued outstanding uh bills to local suppliers that are not included, right? So, I think one of the very interesting um developments in the public debate over the last few months has been the fact that the Bahamas still does not do accrual accounting.

[00:17:41]Now, for anybody in the accounting field, I'm not an accountant, I'm an an economist, but as an economist, the IMF has been saying for many years now the Bahamas needs to move to accrual accounting.

[00:17:52]The Fiscal Council continues to point this out, and I think I would encourage Bahamians to really pay attention to the reports of Fiscal Council just because it's an independent body, and their job is really to inform all of us as to what's happening on the fiscal side. Fiscal Council is saying we need more transparency in our reporting of the data, and I think here is one of those areas where um if we had a full view of what the government has contracted, who hasn't been paid, it will give us a better sense of where we headed, especially in terms of those debt numbers that were quoted. And on the debt numbers, what I would um encourage the Ministry of Finance to do is to be clear.

[00:18:40]Central government debt is just one part of the overall public debt, but we need to talk about the overall public debt to GDP ratio, which is a number much higher than the 50% that the the minister started quoting in his speech.

[00:18:53]>> And why is that so concerning? I mean, the fact that we, as you said, we we don't know um or we're not able to see that, but why is that potentially so concerning?

[00:19:01]>> Because it's in economic terms it's called contingent liability. So, if state-owned enterprises, let's pick Water and Sewerage or BPL because the government still has ownership in that or any state-owned enterprise. If they are contracting debt and they are unable on their own balance sheet to cover that debt themselves.

[00:19:25]Let's say water and sewerage or I'm I'm just being very um theoretical here. I'm not quoting any direct numbers, but if water and sewerage were to decide to go out and borrow a hundred million dollars to put in new new pipes, their budget may not be able to accommodate it, but they may get a guarantee from the government from the central government to do that. That's that's typical. All governments do that.

[00:19:49]That's not a it's not a big deal. It's not anything nefarious. It's just what happens, but in the event that happens, those that hundred million dollars has to be considered a contingent liability on the part of the of the central government.

[00:20:03]What we're seeing when when you when we're only quoting central government debt is just revenues coming into the central government's budget, not including water and sewerage or all those other public sector enterprises out there, airport authority, hospital authority, all those things.

[00:20:18]All those debts need to be accounted for somewhere in the budget. So, that's where when we put them together and aggregate it, then we come up with the overall public debt levels. It's important to know what that number is because the rule of thumb for a country of this size is our overall public debt should not exceed 60% of GDP.

[00:20:40]When we include all of those other enterprises, we're over 70% of GDP.

[00:20:45]>> Wow.

[00:20:46]>> Um not knowing what those are, especially coming out of this budget, it means that, you know, saying that the central government budget by 2031 is going to get down to 30.3% he said by 2036, that's nice, but what's happening on the other side? We We to talk about always talk about overall public debt debt levels.

[00:21:10]>> Interesting.

[00:21:11]I want to cross over to Grand Bahama and something that you raised, the acquisition of all outstanding shares of the Grand Bahama Power Company by the government effective May 12th. The minister stated that the GBPC will adopt the Bahamas Power and Light tariff structure lending to an estimated 30% savings on electricity costs for the typical Grand Bohemian household.

[00:21:33]What's your immediate reaction?

[00:21:35]>> Well, first of all, I I don't know where the 37% came from. I was listening to something, I think there was a BPL There was there was some engineer from BPL yesterday was was being interviewed and trying to explain what happens with our energy prices in this country. So, we know that in Let's say in Agua.

[00:21:56]>> [laughter] >> Mhm.

[00:21:57]>> In Agua, Mayaguana, Family Islands, New Providence consumers are subsidizing the cost of electricity for the entire country. So, you know, it's sort of like Uh here's an example of a multilateral development bank like the IDB where we we charged IDB charges the same interest rate to all of its members, whether you're Argentina or whether you are the Bahamas, right? So, it doesn't matter the size of the country.

[00:22:26]You know, the income model is we will we will try to make it even burden sharing across the whole membership. That's the same sort of concept here where we are providing energy to every Bohemian throughout the archipelago. Doesn't matter where they are.

[00:22:45]That cost has to be borne by the consumers, let's say the 200,000 households that we have.

[00:22:53]And then we spread that across all of the consumers.

[00:22:58]What I don't know about GBPC, Grand Bahama, whatever it's called, is that what was the cost structure and the revenue structure and income model of that entity before the government decided to buy it? And whether the motivation for buying it was affordable electricity for Grand Bahama, um more reliable electricity for Grand Bahama?

[00:23:21]What's the motivation? Was there a a problem? Was there a challenge that the government had to solve for Grand Bahama? I I haven't seen enough evidence that there was a problem for Grand Bahama. Are Grand Bahama Are people living in Grand Bahama actually paying 30% more than you and I living in New Providence? Is that the current situation?

[00:23:45]I don't know because I haven't seen any evidence of that. But if that's the basis on which the government has made this decision to help the households in Grand Bahama, then it would make sense, but I think we have to then think about what is the cost structure uh for energy generation across this archipelago. And on this topic, I think we are ripe for a conversation about renewable energy and decarbonization away from fossil fuels throughout the archipelago. And here is where I thought this budget would give us some more insights as to what's happening there.

[00:24:22]And while I've heard some plans from BPL about moving to LNG and and having solar panels in some on some parts of the grid, what the Bahamas needs desperately is an integrated resource plan for energy that makes sense. And so far, I think the public is a little bit in the dark as to what that is. We've had Even in the last budget, uh last year, there were lots of there were lots of conversa- lots of issues around how to get more renewable energy throughout the the Bahamas.

[00:24:58]Progress on that has been fairly limited because one, I'm not seeing where our electricity prices are coming down. I'm not really seeing more solar come on the grid. I'm not seeing thermal energy come on the grid. So, I think here is where there's room for a lot of reform and a lot of policy direction, which was not covered in the budget.

[00:25:19]>> Final question before we go to the break. Looking at this from a strategic and macro perspective, the government is also extending BPL's fuel hedging arrangement, which protects against price hikes for 2.5 million barrels of fuel oil to the Grand Bahama Power Company. From a multilateral buying framework, how does a state absorb an energy utility company while trying to maintain a downward public debt trajectory?

[00:25:48]>> Mhm, that's a really good question. Lots of pieces there. So, first of all, what I mentioned about the overall public debt.

[00:25:55]>> Mhm.

[00:25:55]>> Right? So, I don't know if we're going to now call this a state-owned enterprise, meaning it's operated separately from the central government, or whether the this is going to be a subsidiary of BPL.

[00:26:07]I don't know the technical structure of how this is going to work.

[00:26:11]But, I think it's the same set of issues that I mentioned about state-owned enterprises and how we cover the cost of state-owned enterprises, right? So, if the Grand Bahama energy company can be self-sufficient if they don't if they're not requiring subsidies from the central government, and they can stand on their own two feet, but given that we're now promising to lower the consumer prices in Grand Bahama by 37%, it would suggest that the operating side of the Grand Bahama energy company needs some work, right? And I don't know if that work is on the technical side, it's through the generation side, through the distribution side, whatever.

[00:26:52]I think we need more more information on that.

[00:26:55]Um but it will add to the overall public uh sector debt. It will even add to the central government's uh debt in this case because the central government is buying the shares outright. So, it becomes a central government uh liability.

[00:27:11]>> All right. So, a lot more to unpack, a lot more to get to. When we come back, the opposition's response to the budget, plus more [music] insight from our expert here.

[00:27:20]This is on the record. Stay with us.

[00:27:22]We'll be back right after this.

[00:27:26]>> Um >> And we are back on the record tonight.

[00:27:58]Our topic, driving progress inside the 2026-2027 budget. My guest, macroeconomist Therese Turner-Jones, CEO of Maxwell Jen Limited, an economic and strategy consultancy. That's a long name. Uh whose extensive background, as we said earlier, spanned senior roles at the IMF, IDB, and CDB. We're going to get back to our questions in just a moment, but first, the opposition also pushing back against the Davis administration's budget communication yesterday, accusing the government of painting an overly rosy picture of the economy. They're also raising concerns over the spending of taxpayer money, government transparency, and whether the budget offers real relief for working Bahamians. Ardelvado Emmanuel has that story.

[00:28:46]>> It's it's more of the same. and and in our view, the government hasn't has failed in our view to provide meaningful proposals that we believe would transform our people's lives.

[00:28:57]>> The 2026-2027 budget communication was delivered by Minister of Finance Michael Halkitis, who spent more than 2 hours outlining the government's economic performance and plans for the years ahead. Among the initiatives announced, healthcare expansion, Family Island clinic upgrades, pension reform, property tax adjustments, and new incentives aimed at making home ownership more affordable.

[00:29:21]But Free National Movement's leader Michael Pintard says despite the government's claim of economic progress, many Bahamians are still feeling the pressure of high food prices, rising bills, and daily financial strain. The opposition leader says it's a budget built on concealment, not transparency.

[00:29:36]>> how they went about spending $200,000, having those funds leave the Ministry of Finance and end up in Abaco in the form of vouchers used to aid the political campaign. The past and present Minister of Housing still has not explained how they have been able to provide $40.2 million of the people's money to the housing project Renaissance through the Carmichael Village project.

[00:30:12]This is a matter that we hope to discuss during the course of this budget.

[00:30:17]Have you been able to produce $10 million, $20 million, or $40 million worth of homes?

[00:30:25]>> The opposition leader also questioning government's claim of fiscal surplus.

[00:30:29]>> The government's surplus figures rely heavily on ignoring bills that are owed but not yet paid.

[00:30:37]Families know the reality.

[00:30:40]You do not improve your finances by pretending the bills do not exist.

[00:30:47]A surplus built on unpaid obligations is not a sign of strength.

[00:30:52]It's a sign of delay and deferral.

[00:30:55]Eventually, these bills come due.

[00:30:57]>> But despite his criticisms, the opposition leader also gave some positive feedback.

[00:31:02]>> Anything that makes the potential for home ownership uh greater, we applaud.

[00:31:09]So, when when we hear about a reduction of of of VAT for first-time homeowners or a multi-purpose building, a triplex, or or um or or fourplex, and and the VAT is uh again reduced for the first-time homeowner, any step in that direction is a is a is a good step.

[00:31:32]>> When asked to rate the Davis administration's budget communication presentation, Pintard had this response.

[00:31:38]>> Less than 50.

[00:31:40]>> Mr. Pintard, why?

[00:31:42]Why do you think the government keeps boasting about the surplus?

[00:31:45]>> Because their story is the same.

[00:31:47]>> Reporting for Our News, I'm Davardo Emmanuel.

[00:31:52]All right, and a part of any budget presentation on budget day is an opposition response, which you just heard there. Um presenting a lot of questions on the budget. Some of them I think we we've raised in some ways here.

[00:32:02]I want to talk about the portion now that focused on the everyday or life of the everyday Bohemian. The government has framed this particular budget around affordability following the complete removal of VAT from unprepared and uncooked food items on April 1st, this budget expands the zero-rated VAT treatment for first-time homeowners to multi-unit properties like duplexes and fourplexes, provided one unit is owner-occupied.

[00:32:32]It also slashes duties on equipment like chair lifts. Given your work with the International Development Bank uh s- on social equity, do these really translate into real savings?

[00:32:46]>> So, no. Well, they might, but the best way to go about tackling affordability, and I mentioned this on the not on your show previously, but being interviewed by by someone else on these VAT exemptions on unprepared foods and others, and even some of these items here is to have targeted social assistance. So, what the Bahamas lacks, and a lot of other countries in the region, have, as well as around the world, is a proper social security system, right? So, unemployment benefits, um benefits for uh the elderly, benefits for single-headed households, especially if children are involved. Trying to look at that portion of the society that are really what in Bahamas we call hard up.

[00:33:40]But here we have blanket across-the-board subsidies, and I mentioned this previously that unprepared foods, whether it's broccoli, cauliflower, celery, sweet peppers, all of those items that I'm using to cook with, and everybody else is using to cook with, if I'm in a higher income bracket than you, Jerome, I'm getting subsidized when I maybe don't need to get subsidized.

[00:34:08]So, the government's losing revenue on someone like me when the the person they really want to uh be subsidizing is a person who's earning maybe half of the income that I'm earning, right? So, that's why we talk about targeted assistance to to poor to the poor. So, here you have sort of like a, you know, blanket, everybody gets the benefit, which doesn't make sense, it costs them revenue, but it also gives me a benefit that gives others a benefit that maybe they don't need.

[00:34:36]Whereas the people at the bottom who really need the assistance, who may not be buying as much broccoli and cauliflower and and fresh fruits and vegetables as me because they are really focusing on bread basket items, tuna, all those other things which are also yeah, those things are already low exempt lower rated because they're in the bread basket.

[00:34:59]But we know that if you're struggling on your on your food budget every week, you're going to go with the high caloric type foods. You're going to go for grits and rice and macaroni and those things that fill up the stomach as opposed to some lettuce and some tomatoes and some broccoli which may be healthier for you and you can maybe afford it more now, but that's not really where you're going to be spending most of your little bit of money you have on your grocery bill. So, I don't like those kinds of subsidies.

[00:35:33]International organizations and MDBS don't like them because more people who need it aren't really getting a benefit. So, that's what I would say on that. On these other items, I found it pretty esoteric to be reducing a tariff on a chair lift like I don't know how many of our elderly are living in two-story homes and maybe this they have done the research to say that Bahamians need chair lifts in their homes, but I find that one a bit um a bit odd.

[00:36:05]Um while I sympathize with the medical human hair and wigs reduction because again, a lot of Bahamians are now especially women are falling prone to cancer.

[00:36:20]Um but again, those aren't these aren't going to touch the majority of people. That's not going to help my affordability if I'm a single mom with with two kids and I need to feed them. So, that those aren't the things I'm I'm concerned about. Sanitary products, yes.

[00:36:37]I didn't get the one about household plastics and serviettes. I didn't know what that meant because we're supposed to be actually reducing our single-use plastic use. So, why would we incentivize? Yeah, from an environmental perspective, that doesn't hold for me.

[00:36:52]Um non-motorized bicycles.

[00:36:55]So, I'm not sure what we're getting at here on this particular set of incentives.

[00:37:00]E-bikes, yes, I can see that. That makes sense. What I would say on public transportation is we need more public transportation, not less. If we're going to go e-bikes, we need to think about safety. We need to think about bike lanes, which we don't have in this country. Um we know what it's like trying to share the road with with just the motorcyclists, let alone bicycles.

[00:37:20]So, >> enough in a car.

[00:37:22]>> of stuff going on here.

[00:37:24]Um the two-tier property tax is a very exciting idea, but the minister wasn't um detailed enough to say whether that's really going to help with affordability because he didn't say whether domestic uh property tax payers will pay less or the others will pay more, but I'd like to earn learn more about that. On the first-time home buyers with the with the multiplex owner-occupied units, I think maybe the a better incentive would have been just on the land purchase.

[00:37:57]Can we incentivize every young Bohemian to be able to be able to afford a piece of land? And let's find ways to do that.

[00:38:05]I see the little bit of a giveaway on the VAT on a on a on a multiplex, and maybe some people will find that exciting, but I think most young people today can't even get their foot into buying a piece of property, let alone build a multiplex. So, some of these items are are I think will yield marginal results, but for the bulk of Bahamians, I think they will find it hard to that this budget is offering a lot on affordability.

[00:38:34]I found it weak on that.

[00:38:37]Um and uh I I think maybe they need to as as we say, reel and come again on some of these items.

[00:38:46]Um the stuff around maritime um taxes and the whole mess up last year with the the marinas and so on. Hopefully, there's consultation going on before they decide to impose these new uh taxes.

[00:39:03]The point about uh revenues and leakage being a big issue is I think is an administrative issue and I like the the notion that we're going to put more emphasis on on on revenue authority and how to do things better on tax administration. That's always important.

[00:39:23]Um Yeah, so but affordability, I think I don't know that anyone would call that a home run.

[00:39:31]>> I want to talk uh a little bit about capital infrastructure. The real test of economic sustainability lies in capital infrastructure and the allocations to support these communities. Looking at uh this table of expenditure for health and other essential infrastructure, family island clinics for instance, 11.6 million, New Providence tertiary hospital, 20 million, Bridge Authority, which is the glass window bridge, um there's a loan guarantee there for 90 million. Water and sewage, 21.5 million for the family island or for family island water upgrades. We touched on it a bit um in the earlier uh segment.

[00:40:09]Looking at it um from a um I guess from a non-professional standpoint, seems like a lot of money.

[00:40:16]But your feedback on these allocations, particularly when you look at the capital budget versus the recurring.

[00:40:22]>> So, I started out talking about that.

[00:40:23]That's one of the things I look for. So, on the capital budget I think these are interesting areas to focus on. I'm surprised that the glass window bridge is in there as a contingent as a guarantee. That that means public debt overall public debt is increasing, but also that it's a guarantee. It means it should also be showing up on the central government, right? If it's a guarantee, so just look out for that. Um those seem like big numbers, but you know, clinics on 23 islands, 11 million, not not not that much when you spread it out over the the 22 populated islands we have.

[00:41:00]Um again, I think the weakest part of this budget is the capital side because it's less than 3% of GDP, which is extremely low.

[00:41:10]Um as a share of of of GDP for administration and a GDP the size of the Bahamas, I think we should it should be at least seven, which is also low, but you know, anything below 10% is not is not a big number for capital expenditure.

[00:41:28]There was also reference to in the budget to using loan proceeds rather than reducing the debt.

[00:41:36]Um Minister mentioned that the loan proceeds were going into a national investment fund. So, that means you know, some of those loan proceeds that they would have I don't know. Can't remember what all the things they borrowed for in the last budget, but that any excess loan proceeds would then be going to the investment fund, which would then help to to pay for these capital expenditures. I don't think it's an impressive array of of infrastructure works given some of the issues that we have including the state of our roads, the state of our hospitals, the $20 million on on new hospital. I wasn't sure if that was the one that's going to be built with its Chinese financing or this is another.

[00:42:18]>> New Providence Tertiary Hospital. I interpreted that to mean the existing hospital. I I could be wrong though.

[00:42:27]>> need some work to the PMH for those of us who had to experience that anytime this year.

[00:42:37]Yeah.

[00:42:37]>> Is $20 >> It's a small number.

[00:42:40]>> Okay.

[00:42:40]>> It's a very small number for not just the footprint of the PMH, but also the kinds of work that needs to be done. Remember, the PMH currently doesn't even have a functioning kitchen.

[00:42:52]Right? So, the that number seems maybe just to to outfit the kitchen. I I don't know, but I I think that anybody given the kinds of health issues we have, all of these non-communicable diseases from diabetes to cardiovascular, cancers, all these things.

[00:43:11]I mean, any any trip to the PMH today and the types of intake in there, younger people on the wards, um uh it's a scary picture and it also does not speak very well about our preventive health care system. So, in in the multilateral world, if you're advising on health issues, you say less money on on physical plant, meaning less money on building new hospitals. More money should be spent on preventive >> Preventative care.

[00:43:43]>> care. And here I think is where Bahamas to me, when I did analysis a while ago on what is this around the region, we used to have really good primary care clinics. The system of the clinics, for example, prenatal, postnatal, all of that, the clinics being in communities.

[00:44:02]That's a really good model. I don't know know happening now, but maybe we need to try to push more of the resources back into the clinics to get people to do the preventive health care that they need, immunizations, make sure people are getting their checkups, da da da. You don't have to go to hospital for that.

[00:44:20]>> And and beyond just that, I mean, just making those clinics better equipped to handle some of the everyday >> Correct.

[00:44:27]>> um illnesses and and situations that people have that are not catastrophic or require great care, but if those clinics could be able to service more of those communities in the day-to-day needs, it would take a lot of strain off the hospital. But that's a show for another day.

[00:44:39]>> one one thought on on health care is, for example, if you take a disease like diabetes, which we know a lot of Bahamians are suffering from. If you take a disease like diabetes and you focus on we're going to eradicate diabetes over the next 5 years under this administration, you would be amazed >> At the at the savings. Yeah.

[00:44:55]>> the the downstream um effect of that, because diabetes, then you're talking about nutrition, what people are eating, how they eat, da da da da da.

[00:45:04]>> And so many things connected to that. I I got to move forward here though.

[00:45:06]Another major item under the expenditure is a sweeping public service reform.

[00:45:10]Government is tabling a white paper for a contributing uh contributing public contributing public sector pension scheme. 3% from employees, 5% from the government, alongside a comprehensive health insurance plan with three tier options for public servants. Given the size of our public sector, um how significant is in a structural shift is this for us?

[00:45:35]>> Pretty significant, and I but I again, I was surprised to see it in there just because we have a lot of work to do on the national health insurance plan.

[00:45:44]Um the fact that public servants don't have health insurance, I mean, uh my mother is a retired nurse, and through the public sector union organization, she has a health plan through that, and I think a lot of public servants use that. That union plan as a as a as a safety net and it's been very effective.

[00:46:13]Obviously something needs to be done.

[00:46:15]But it has to be costed properly. You know, introducing a public health insurance plan for public sector workers at this moment in our history requires a lot of details and work that was not shared and I think public sector workers would welcome that because obviously when they get sick, if they're not part of the union plan, then they have they're in trouble. And maybe that wouldn't that would then have more people included in the health insurance net. But I think we have to look at our national health insurance policies versus what this plan is going to be introducing. On the pension side, I we're in trouble because our demographic shift is happening very fast. More people are retiring, more people are living longer.

[00:47:01]And national insurance is not it for covering some of those costs later on in life.

[00:47:08]And so I think it's a good really good idea and I applaud them for having this this idea. But we need I mean, devil's in the details and it needs to be costed and and I think [clears throat] I think public sector workers would welcome that because nobody, you know, if you can be putting something aside for later, that's always better than just consuming all of your [clears throat] salary.

[00:47:30]>> Again, a lot of a lot of the pensions are done through the unions and the and the union schemes. Let's look at the heavy emphasis on digital transformation and national and national expenditure lines. We're seeing funding for an artificial intelligence governance act, an Oracle data center, biometric identity border systems and the procurement of 40 new fire trucks split between the fire department and the airport authority. From a development perspective, how crucial is this um technological backbone?

[00:48:05]>> Okay, so our technological backbone I think is really weak, especially when it comes to public service delivery, right?

[00:48:12]So in some countries there's so much you can do online with the government agencies you don't have to walk into a a building to do it and deal with the human beings. So I'm all for that. The data center piece is a bit um raise some eyebrows just because we know data centers are extremely energy high energy dependent and certainly if Oracle or AWS was going to introduce those data centers into the Bahamas, I'm sure we're going to ask them to provide their own electricity and water because these two are the key ingredients for running a data center today. Artificial intelligence runs on a lot of water, a lot of electricity and space.

[00:48:52]Um and if we can find creative ways to generate energy and I've talked about this in other spaces, we we haven't touched our ocean and I there's a technical term for what the ocean thermal technology, but there's a way to generate energy from the surface temperatures of the ocean that could help do that much uh cheaper than our current model of fossil fuel uh usage then it might make sense, but I would I would caution the government and I there's smart people there in the Ministry of Finance and I'm sure they're looking at this, but we have to be very careful when we start introducing data centers into our already constrained electricity space. Bahamians um we really don't especially this time of year nobody loves when the lights go out, so I think putting more strain on that infrastructure that we have now is [clears throat] going to be going to be a challenge and I I'm hoping that the people at BPL and and those in the Ministry of Energy will think about think about this really seriously because I don't think anybody anywhere in this archipelago wants to give up their water or their electricity for Ellison or Bezos at this moment.

[00:50:13]>> Final question. Um we're just about out of time. Thoughts on the international credit rating impact. The minister highlighted that the S&P upgraded us to I think it's BB negative last summer and Moody's recently upgraded our profile in April pointing to our strong track record of fiscal consolidation. From a macro perspective, does this budget keep us on path to investment upgrades?

[00:50:42]>> It should, but I want to remind Bahamians of where we're coming from. We used to be triple A rated. We used to be investment grade rated. So the fact that we're not a triple A rated country anymore means that we pay more when we borrow from our capital markets or anywhere.

[00:50:57]And that doesn't just affect the government, that affects every borrower in the country.

[00:51:02]Um so the fact that we are being upgraded is a good thing, it's a positive, but that's not so unusual given that we're coming off a very very very difficult economic period after COVID. So after COVID most countries either had a downgrade, well most countries of our size in this region had a downgrade or they stayed the same.

[00:51:25]Um the Bahamas has been fortunate. We're a small country, so it doesn't take a big investment to generate more employment or to generate more income. You know, one new hotel and oops, you've got a 800 more people working.

[00:51:39]But what I think we need to be seriously thinking about and having a public consultation around is our revenue base. It's not really sufficient. It's overly now dependent on on still um tariffs and indirect tax of VAT.

[00:51:57]And I know nobody likes to hear this, but at some point we're going to have to think about income tax. And yes, we're starting with the minimum uh top up. And the reason why we're doing that, by the way, is to be in compliance with some international global rules around taxation. So, it's not that we thought this was a good idea. This is something we had to do just to be compliant with with international standards on taxation. So, but that's a conversation Bahamians have to start. We I mean, we we went into VAT kicking and screaming.

[00:52:29]>> Mhm.

[00:52:30]>> But imagine if we didn't have VAT, where would we be on the on the budget side and where would we be on our credit rating? So, I just like to invite Bahamians to think about one, how we earn our revenue and we need to think about other ways of doing that, but we also need to think about new economic activities. Cuz Bahamians are smart now. They don't just want to work in a hotel or work in a financial institution. What else can we be doing?

[00:52:56]Why can't we grow our small medium enterprises where people are actually inventing and doing things themselves?

[00:53:02]That would make it more exciting. So, that's where we are. I'm very happy about the upgrades and I hope that they continue, but we're far away from a triple-A rating and that's really the gold standard and that's where we want to be.

[00:53:15]>> Teresa, thank you so very much for joining us tonight. You know, um I I know the first time we spoke I said, "Gosh, I got to bring you back on to help to help me and others understand um uh these many, many questions. You're helping us to dissect this information and it's so important um because I think so often uh when you have a a presentation like the budget communication, it does does allow you to properly digest, [music] filter, um and draw your own conclusions. And tonight you were able to help us in so many ways to understand that. And thank you so very much. Of course, the budget debate will come, um which is the government's opportunity really to drill down on all these numbers and to go into a lot of these programs that they have listed and a lot of these initiatives. And so, in the coming weeks we'll be very [music] much keenly watching that debate to see how these numbers play out. Thank you so much for sharing.

[00:54:05]>> No, thank thank you. And I encourage Bahamians to just stay informed, um and just to put an orange hat on. Um there are lots of tools on the website to learn about, you know, the budget and what it means and how you can get involved and what do you need to make the best decisions for yourself and your family and your businesses.

[00:54:22]>> And I did I did not mention at the top of the show >> [music] >> Therese came to us through ORG, a very important organization. And you as you said, go to the website and if there's information there that can help you um to understand and dissect. And ask your own questions. You know, we've just come through an election. I did say to people, question your MP. You know, they are there to represent you. Thank you so very much. All right. So, we hope that you've enjoyed our show tonight. Thank you to my guest, Therese Turner-Jones, for breaking down the information within the budget communication. As the debate moves to the House of Assembly for the second reading, the numbers point to a turning point for the Bohemian economy.

[00:54:56]The road ahead [music] remains tied to global volatility, but with an aggressive push toward energy independence, structural tax overhauls, and historic capital investments, the administration is betting heavily on its mandate to build on progress. Once again, I'm your host, Jerome Sawyer.

[00:55:15]Thanks for watching. We'll see you next time right here on the record.