NASSAU — The government yesterday released its Fiscal Responsibility Bill, 2018, on the Ministry of Finance’s website, which sets policy that will seek to constrain government’s fiscal processes and keep the country on a medium-term trajectory toward economic growth, while creating a culture of transparency and responsibility with regard to public funds, the Nassau Guardian reported on May 15 in an article written by Chester Robards.
When implemented, the bill will require government to reduce its debt to gross domestic product (GDP) ratio to 50 percent of GDP over time.
Deputy Prime Minister and Minister of Finance Peter Turnquest said yesterday at a press conference announcing the bill that the country’s debt to GDP ratio is currently at 58 percent.
Besides lowering the debt to GDP level, the law when implemented will require the government to lower the fiscal deficit of 5.8 percent of GDP to no more than 0.5 percent within three years.
Government will also be required to keep its comparative year-on-year current expenditure at or below 3 percent.
The International Monetary Fund (IMF) and Inter-American Development Bank (IDB) both provided guidance on the framework for the legislation, according to Turnquest. As the government introduced the bill yesterday, the IMF released its recommendations to The Bahamas on the implementation of fiscal responsibility legislation.
Turnquest explained that the chief strategic goals of the bill focus on lowering the country’s deficit and maintaining a sustainable fiscal balance, lowering debt to sustainable long-term levels, and maintaining current expenditure growth in line with growth in nominal GDP.
“We believe that this combination of fiscal objectives will achieve sustainability in the government’s finances and ensure the long-term stability and viability of the Bahamian economy,” he said.
