Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697647003819.pdf (Bahamas)
COMBINED MONTH FISCAL SNAPSHOT & REPORT F I S C A L Y E A R 2 0 2 0 / 2 1 on Budgetary Performance J U LY - M A R C H Section 1 The Snapshot Section 2 The Report Published by The Ministry of Finance, The Bahamas, April 2021 | Full report available online at www.bahamasbudget.gov.bs NINE FISCAL BALANCE DEFICIT POSITION $878.2M 1000.0 800.0 600.0 400.0 200.0 0 $251.3M 9 Month Def icit Position Comparison (B$M) $878.2M Provisional data on central government’s operations for the nine months to March of FY2020/21 indicate a widening in the fiscal deficit, to $878.2 million from $251.3 million during the same period of the prior fiscal year.
This outcome is largely attributed to the impact of the pandemic and related measures, which significantly curtailed revenue receipts and necessitated extraordinary increases in expenditure to support various social assistance programs.
9 mths FY19/20 9 mths FY20/21 DEFICIT WIDENED 249.5% REVENUE $1,229.7M EXPENDITURE $2,107.9M The continued relaxation of COVID-19 restrictive measures during the third quarter FY2020/21 and the restart of the tourism sector have improved Bahamian economic activity resulting in a firming of revenue collection in the third quarter FY2020/21.
Compared with the same period in FY2019/20, however, total revenue declined by an estimated $527.4 million (30.0 percent) to $1,229.7 million or 70 percent of last year’s collection and 69.8 percent of budget.

The improved revenue outturn was largely driven by increases in collection of Value Added Tax, excise taxes, License to Conduct Special Business Activity (Business License and Communication Levies), customs & other import duties and immigration fees.
9 Month Revenue Performance Comparison (B$M) $1,757.1M $1,229.7M 2,000.0 1,500.0 1,000.0 500.0 0 Aggregate expenditure increased by $99.5 million (5.0 percent) to $2,107.9 million, boosted by significant increases in social assistance benefits ($145.0 million), finance charges ($43.5 million), public debt interest ($21.8 million) and subsidies ($19.2 million).
However, these upturns were dampened by reductions in outlays for compensation of employees ($61.0 million), supplies & materials ($11.5 million) and services ($10.0 million).
9 Month Expenditure Peformance Comparison (B$M) $2,008.4M $2,107.9M 2,120.0 1,590.0 1,060.0 530.0 0.0 9 mths FY19/20 9 mths FY20/21 9 mths FY19/20 9 mths FY20/21 REVENUE DECREASED BY 30.0% EXPENDITURE INCREASED BY 5.0% 2 Third Quarter Fiscal Snapshot on Budgetary Peformance FY2020/21 TAX REVENUE SUMMARY Taxes on Goods and Services – accounting for 72.2 percent of total government tax revenue, contracted by $402.2 million (35.0 percent) and represents 70.2 percent of the budget target.
Due to COVID-19 health and safety measures VAT receipts remain depressed by $268.9 million (36.4 percent) at $469.8 million or 70.5 percent of budget.

Specific (Gaming taxes) contracted by $14.4 million (46.7 percent) to $16.4 million.
Proceeds from the Patrons Winnings Tax implemented 1 January 9 Month YOY Revenue Performance Comparison (B$M) 9 mths FY20/21 9 mths FY19/20 $738.7 $469.8 Property $85.0 $96.6 VAT Total Stamp Tax Excise Tax Trade Taxes Gaming Motor Vehicle Business Licence $51.9 $41.7 $30.8 $16.4 $21.0 $23.8 Other $15.8 $19.9 $209.1 $129.0 $312.2 $163.0 $87.6 $74.0 REVENUE PERFORMANCE 2021 have not resulted in improved revenues due to a legal challenge by the Association of Gaming House Operators in respect to the application of the tax.
Motor vehicle taxes improved by $2.8 million (13.1 percent) to $23.8 million and 72.0 percent of budget, largely owing to improved revenue collection attributed to digitization efforts at the Department of Road Traffic.
9 Month Tax Revenue (B$M) REAL PROPERTY TAXES • 9% $96.6 MOTOR VEHICLE • 2% $23.8 GAMING • 2% $16.4 TRADE TAXES • 16% $163.0 EXCISE TAXES • 13% $129.0 TOTAL $1,034.1M OTHER • 2% $19.9 VALUE ADDED • 45% TAX (VAT) $469.8 STAMP • 4% TAXES $41.7 BUSINESS • 7% LICENCE $74.0 RECURRENT EXPENDITURE Compensation of employees contracted by $61.0 million (10.6 percent) to $513.1 million, for 68.5 percent of the budget target.
Expenditures for the acquisition of goods & services increased by $15.5 million (4.2 percent) to $381.1 million and representing 68.3 percent of the annual budget largely due to an increase in finance charges to $52.7 million.

Special Financial Transactions increased by $6.8 million (10.6 percent) to $71.2 million as efforts were made to realign outstanding arrears with payment agreements.
Subsidies to public corporations increased by $22.0 million (7.6 percent) to $310.6 million inclusive of budgetary support to the air transport sector.

Social assistance benefits—in cash or in kind—expanded by $145.0 million to $167.3 million—being driven COVID-19 related hikes in outlays for unemployment assistance ($108.0 million) and food assistance programs ($43.9 million).
9 Months Recurrent Expenditure Peformance Comparison (B$M) 9 mths FY19/20 9 mths FY20/21 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 513.1 600.0 574.1 NON-TAX REVENUE SUMMARY Non-tax revenue contracted by $9.3million (4.5 percent) to $195.6 million and 79.1 percent of the budget.
Revenues from the sale of goods and services contracted by $14.1million (11.2 percent) to $111.8 million and 72.2 percent of the budget largely driven by the $4.2 million (7.0 percent) reduction in immigration fees and $4.7million (14.3 percent) reduction is customs fees.

Miscellaneous and unidentified revenue firmed by $3.3 million (21.3 percent) to $18.7 million, primarily driven by the $16.8 million premium on the December 2020 US$225.0 million bond placement.
500.0 400.0 300.0 200.0 100.0 381.1 365.6 336.1 317.5 264.1 242.3 167.3 184.0 175.0 104.5 103.1 22.3 Compensation Goods & Services Interest Subsidies & grants Social Assistance Pensions & Gratuities Other CAPITAL EXPENDITURE Capital transfers declined by $27.8 million to $44.4 million during the first nine months of FY2020/21.
Transfers included $18.6 million in support for small and medium sized enterprises, $8.7 million to continue recovery efforts from Hurricane Dorian and $3.3 million to restore the Rand Memorial Hospital in Grand Bahama.

Expenditure on capital works similarly contracted by $2.4 million (1.9 percent) to $123.5 million and 40.1 percent of budget.

Capital spend included $5.0 million in spend to improve government buildings, $1.5 million to acquire sea vessels and $5.0 million in park and ground improvements.
Third Quarter Fiscal Snapshot on Budgetary Peformance FY2020/21 3 FINANCIAL ACTIVITIES The government’s operational activities for the first nine months of FY2020/21 included a net increase in liabilities of $1,080.3 million.

NATIONAL DEBT National Debt is calculated by adding Government Debt together with Contingent Liabilities, which are monies owed by State Owned Enterprises that are guaranteed by the Government.

The Central Bank of The Bahamas reports on the National Debt every calendar year.
NATIONAL DEBT $9,856.7 million As of December 2020 www.centralbankbahamas.com CHANGES IN GOVERNMENT DEBT Government Debt is money owed directly by the Government.

It is also referred to as the Direct Charge on Government.

These financials are reported by the government by fiscal year.
MONEY BORROWED GOVERNMENT DEBT $783.4M Bahamian Dollars $1,609.0M Foreign Currency MONEY REPAID $1,080.3M Bahamian Dollars END-MARCH 2021 $9,503.5M END-JUNE 2020 $8,181.2M 66.0% of GDP 82.8% of GDP During the period, budgetary financing requirements were met through gross borrowings of $2,392.5 million compared to $936.5 million in the same period of the prior fiscal year.

Domestic bond issuances totaled $8250.0 million, while US$825.0 was raised from the international bond placements.
Foreign current loan financing of US$752.0 was secured in addition to drawing on US$32.1 million from existing facilities.

Short-term domestic financing comprised $23.6 million in Treasury bills and $334.9 million in Central Bank advances.

Payments on the amortization of debt totaled $1,080.1, above the $585.4 million in the prior year.
Policy Initiatives COVID-19 Spend For Enhanced Public Management During the quarter, the Government passed several key pieces of legislation to improve accountability and transparency: » » » » PUBLIC PROCUREMENT ACT, 2021 - The Bill was passed in both the Upper and Lower Houses of Parliament during Q3 FY2020/21 and comes into effect 1 September 2021 PUBLIC DEBT MANAGEMENT ACT, 2021 - The Bill was passed in both the Upper and Lower Houses of Parliament during Q3 FY2020/21 and comes into effect 1 July 2021 PUBLIC FINANCIAL MANAGEMENT ACT, 2021 - The Bill was passed in both the Upper and Lower Houses of Parliament during Q3 FY2020/21 and comes into effect 1 July 2021 STATISTICS ACT, 2021 - The Bill was passed in both the Upper and Lower Houses of Parliament during Q3 FY2020/21 and comes into effect 1 July 2021.
For the first nine months FY2020/21, the Government continued its COVID-19 related support programs for impacted businesses and families, spending a total of $194.9 million.
Summary Of Covid-19 Related Expenses (B$M) BUDGET JULY - MARCH FY2019/20 FY2020/21p Total RECURRENT EXPENDITURE 39.2 180.0 219.2 Public Health Safety Unemployment Assistance Goods & Services Acquisition Job Retention Programs Food Assistance Other 1.9 10.0 1.8 21.4 2.0 2.1 15.5 108.0 2.2 23.0 30.8 0.5 17.4 118.0 4.0 44.4 32.8 2.6 CAPITAL EXPENDITURE 40.3 14.9 55.2 Public Health Safety Goods & Services Acquisition COVID-19 Unit Small Business Loans TOTAL 0.4 0.6 0.3 39.0 79.5 0.0 0.1 0.5 14.3 0.4 0.7 0.8 53.3 194.9 274.4 4 Published by The Ministry of Finance, The Bahamas, April 2021 | Full report availabe online at www.bahamasbudget.gov.bs NINE MONTH REPORT ON BUDGETARY PERFORMANCE FY2020/21 July - March Government of The Bahamas The Ministry of Finance www.bahamasbudget.gov.bs NINE MONTH REPORT ON BUDGETARY PERFORMANCE FY2020/21 JULY - MARCH Contents About This Report ................................................................................................................................ 3 Summary of Fiscal Performance for First Nine Months of FY2020/21 ................................................. 4 Revenue Performance ......................................................................................................................... 7 Expenditure Developments ............................................................................................................... 11 a. b. Recurrent Expenditure ........................................................................................................... 11 Capital Spending .................................................................................................................... 13 Financing Activities ............................................................................................................................ 15 Ministry of Finance Legislative Initiatives .......................................................................................... 17 2 NINE MONTH REPORT ON BUDGETARY PERFORMANCE FY2020/21 JULY - MARCH About This Report General Statement To promote greater transparency in the public finances and align with global fiscal disclosure standards and best practices, the Ministry of Finance provides in-year reporting on the performance of the central Government’s revenue, expenditure and financing operations vis-à-vis the approved budget.
Periodicity: Quarterly (Qtr.

I: July – September; Qtr.

II: July – December; Qtr.

III: July – March; and Qtr.

IV: July – June).

Timeliness: Within four (4) weeks after the end of the referenced quarter, except for Qtr.

IV report which will be released two months after the end of the quarter given year- end closing activities.

Publication: To be released on the Ministry of Finance’s Budget website www.bahamasbudget.gov.bs).
Basis of Preparation The budgetary data are prepared using a modified cash basis of accounting and guided by International Public Sector Accounting Standards (IPSAS) cash basis.

As such, revenue is recognized when received and not when earned, expenditure is recorded in the period it is incurred and paid, and purchases of fixed assets, including immovable property, plant and equipment, are fully expensed in the year of purchase.
The fiscal data tables compiled in the quarterly reports are presented using the new modified chart of accounts introduced on July 1, 2018 which accomplishes two (2) important objectives, namely: § prepares for the eventual conversion of the accounting presentation to the IPSAS accrual basis, § facilitates the aggregation and presentation of the fiscal data to meet the International Monetary Fund’s Government Finance Statistics (GFS) 2014 reporting standards.
The primary purpose of the GFS is to provide a comprehensive conceptual and reporting framework for analyzing and evaluating the performance of the Government’s finances.

Unaudited Data As reconciliation is ongoing, the fiscal data presented in these quarterly reports are subject to change and, therefore, their status is provisional (denoted as “p”) until audited by the Auditor General.

Rounding Because of rounding, some totals may not agree with the sum of their component parts.
3 NINE MONTH REPORT ON BUDGETARY PERFORMANCE FY2020/21 JULY - MARCH Summary of Fiscal Performance for the Nine Months of FY2020/21 Consistent with budgetary expectations, provisional data on central government’s operations for the nine months to March of FY2020/21 indicate a widening in the fiscal deficit, to $878.2 million from $251.3 million in the same period of the prior fiscal year (see Table 1).
This outcome is largely attributed to the far-reaching economic costs arising from the COVID-19 crisis, which significantly curtailed revenue receipts and necessitated extraordinary increases in select expenditure elements to support various health and social assistance programs.
However, the positive impact of the gradual relaxation in health and safety restrictions on domestic business conditions, and improved revenue collection efforts contributed to an improved revenue outcome during the third quarter (see Box B).
TABLE 1: FISCAL SUMMARY (Statement of Sources & Uses of Cash) (B$M) Revenue Tax Non-tax Grants Expenditure Recurrent Capital [a] Budget [b] [c] [b] -[c] [b/a] July – March FY2020/21 FY2020/21p Actual FY2019/20p Actual Variance % of Budget 1,762.6 1,513.3 247.3 2.0 3,089.8 2,574.3 515.5 1,229.7 1,034.1 195.6 0.0 2,107.9 1,939.9 168.0 1,757.1 1,552.1 204.9 0.1 2,008.4 1,810.3 198.1 (527.4) (518.0) (9.3) (0.1) 99.5 129.6 (30.1) 69.8% 68.3% 79.1% 0.0% 68.2% 75.4% 32.6% Surplus/(Deficit) (1,327.2) (878.2) (251.3) (626.9) 66.2% Financing Activities 1,327.2 878.2 251.3 Net Acquisition of financial assets (-) Sinking Funds Equity Other Net Incurrence of Liabilities (+) Borrowings Debt Repayment 46.5 46.5 0.0 0.0 1,327.1 2,023.7 696.6 13.7 13.7 0.0 0.0 1,312.1 2,392.4 1,080.3 40.3 30.0 10.3 0.0 351.1 936.5 585.4 626.9 (26.6) (16.3) (10.3) 0.0 961.0 66.2% 29.5% 29.5% 0.0% 0.0% 98.9% 1,455.9 494.9 >100.0% >100.0% Change in Cash Balance [()= increase] 46.6 (420.2) (59.5) (360.7) -901.8% § Compared with the same period in FY2019/20, total revenue declined by an estimated $527.4 million (30.0 percent) to $1,229.7 million, equal to 70.0 percent of last year’s collection, and representing 69.8 percent of budget.
Consistent with the sharp downturn in economic activity, decreased collections were recorded for value added tax (down 36.4 percent), excise taxes (down 38.3 percent), license to conduct special business activity, mainly business license and communication levies (down15.5 percent), customs & other import duties (down 31.0 percent) 4 NINE MONTH REPORT ON BUDGETARY PERFORMANCE FY2020/21 JULY - MARCH and immigration fees (down 7.0 percent).
However, the yield from property taxes increased by $11.6 million (up 13.6 percent).

§ Aggregate expenditure firmed by $99.5 million (5.0 percent) to $2,107.9 million, boosted by substantial increases in social assistance benefits ($145.0 million), finance charges ($43.5 million), public debt interest ($21.8 million) and subsidies ($19.2 million).
However, the increase in overall expenditure was offset in part by reductions in outlays for compensation of employees ($61.0 million), supplies & materials ($11.5 million) and services ($10.0 million).

§ Owing to the less favourable fiscal conditions, there were no contributions to the sinking funds for future debt amortization for the review period from the Consolidated Fund.
However, capital gains of $13.7 million were realized as the government sold part of the investment holdings of the sinking fund to take advantage of the positive trading fundamentals for US Treasuries earlier in the fiscal year.

The realized capital gains were reinvested in the sinking funds.

§ Budgetary financing requirements were met through gross borrowings of $2,392.4 million compared to $936.5 million in the same period of the prior fiscal year.
§ Debt amortization payments were higher at $1,080.3 million from $585.4 million in the comparative year-earlier period.

§ As a result of net borrowing activities, the Direct Charge on the Government – exclusive of interest rate adjustments, increased by $1,312.1 million to $9,503.5 million or 82.8 percent of GDP1 at end-March 2021, as compared to 66.0 percent of GDP at end-June 2020.
1000.0 900.0 800.0 700.0 600.0 500.0 400.0 300.0 200.0 100.0 0.0 Budgetary Performance (B$M) 903.6 657.6 721.4 761.6 645.9 700.2 556.4 327.9 300.8 372.5 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3FY21 Rev Exp 1 In its April 2021 World Economic Outlook release, the IMF revised its FY2020/21 GDP forecast for The Bahamas upward to $11.5 billion from $11.4 billion.

This revised GDP estimate was used in the calculation of the debt to GDP ratio.
5 NINE MONTH REPORT ON BUDGETARY PERFORMANCE FY2020/21 JULY - MARCH BOX A: SUMMARY OF COVID-19 EXPENDITURE For the nine months end-March of FY2020/21, the government continued its COVID-19 related support programs for impacted businesses and families, with cash outlays of an estimated $194.9 million.
These expenditures relate specifically to COVID-19 containment and mitigation initiatives and does not include budget and expenditure items where the cost is not exclusively utilized for COVID-19 mitigation strategies.
SUMMARY OF COVID-19 RELATED EXPENSES (B$M) FY2019/20 FY2020/21p July - March Recurrent Expenditure Public Health Safety Unemployment Assistance Goods & Services Acquisition Job Retention Programme Food Assistance Other Capital Expenditure Public Health Safety Goods & Services Acquisition COVID-19 Unit Small Business Loans Total 39.2 1.9 10.0 1.8 21.4 2.0 2.1 40.3 0.4 0.6 0.3 39.0 79.5 Total 219.2 17.4 118.0 4.0 44.4 32.8 2.6 55.2 0.4 0.7 0.8 53.3 180.0 15.5 108.0 2.2 23.0 30.8 0.5 14.9 0.0 0.1 0.5 14.3 194.9 274.4 6 NINE MONTH REPORT ON BUDGETARY PERFORMANCE FY2020/21 JULY - MARCH Revenue Performance Revenue receipts for the nine months to March of FY2020/21 stood at $1,229.7 million or 69.8 percent of the budgeted amount—a decline of $527.4 million (30.0 percent) million from the comparative year- earlier period (see Table 2).
Tax receipts, at 68.3 percent of budget, contracted by $518.0 million (33.4 percent) to $1,034.1 million, and non-tax revenue was lower by $9.3 million (4.5 percent) at $195.6 million, for 79.1 percent of the budget.

Percentage Composition of Tax Revenue (FY2020/21) Property 9% Trade taxes 18% Other 6% Bus.

licences 7% Excise taxes 10% Stamp taxes 4% VAT 46% Key developments underlying revenue performance for the nine months review period relative to the year-earlier outturn are outlined below.
§ Taxes on Goods and Services—at 72.2 percent of total tax revenue, contracted by $402.2 million (35.0 percent) and represented 70.2 percent of the budget target o Earlier in the fiscal year, constraints imposed by COVID-19 health and safety measures on business activity had triggered a decline in commercial activity, manifesting in a year or year fall of in VAT receipts of $268.9 million (36.4 percent) to $469.8 million or 70.5 percent of budget.
However, with the gradual improvement in economic conditions, VAT receipts strengthened to $183.4 million in the third quarter, from $151.7 million in the second quarter and $134.7 million in the opening quarter of FY2020/21.
The improvement in VAT collections was also aided by the expiration of certain clauses of the Special Economic Zone (SERZ) concessions designed to aid in the rebuilding of areas of Grand Bahama and Abaco damaged by the Hurricane Dorian in September 2019. o Stamp taxes on financial and real estate transactions were lower by $4.3 million (9.5 percent) at $41.7 million.
7 NINE MONTH REPORT ON BUDGETARY PERFORMANCE FY2020/21 JULY - MARCH o Taxes on specific services (Gaming taxes) contracted by $14.4 million (46.7 percent) to $16.4 million.

The Patrons Winnings Tax implemented 1 January 2021 have not resulted in any incremental revenue from these activities, due to an ongoing legal challenge by the Association of Gaming House Operators in respect to the application of the tax.
o Motor vehicle taxes improved by $2.8 million (13.1 percent) to $23.8 million for 72.0 percent of budget, owing to the reopening of certain offices closed since the onset of the COVID-19 pandemic.

o Taxes on international trade & transactions were lower by $123.2 million (39.5 percent) at $163.0 million.

A major factor was the decline in departure taxes, by $103.6 million (94.7 percent) to $5.9 million or 7.0 percent of budget, amid the slow recovery of the tourism sector.
Revenues from customs and other import duties, of $134.2 million were also $60.4 million below the year-earlier receipts and only 59.7 percent of the budget o General stamp taxes at $1.6 million were $4.3 million (72.2 percent) below the year- earlier intake and represented 22.5 percent of the budget.
9 - Month Comparison of Tax Revenue Performance (B$M) $800 $700 $600 $500 $400 $300 $200 $100 $0 $739 $470 $97 $85 Property VAT $43 $52 Stamp taxes $209 $129 $16 $31 $24 $21 $88 $74 $18 $16 $312 $163 Excise taxes Gaming Motor Vehicle Bus.

licences Other Trade taxes FY2020/21 FY2019/20 § Property income receipts declined by $2.1 million (10.0 percent) to $19.0 million and constituted 46.9 percent of budget.
§ Revenues from the sale of goods and services contracted by $14.1 million (11.2 percent) to $111.8 million and 72.2 percent of the budget.

The lower than anticipated outturn was primarily explained by reductions in immigration ($4.2 million or 7.0 percent) and customs ($4.7 million or 14.3 percent) fees.

§ Fines, penalties and forfeits payments increased by $0.6 million (19.6 percent) to $3.6 million and settled at 78.0 percent of the budget.
§ Micellaneous and unidentified revenue firmed by $3.3 million (21.3 percent) to $18.7 million, primarily driven by the $16.8 million premium obtained on the December 2020 US$225.0 million bond placement.

8 NINE MONTH REPORT ON BUDGETARY PERFORMANCE FY2020/21 JULY - MARCH TABLE 2: REVENUE SUMMARY (B$M) TAX REVENUE (a+b+c+d) a.

Taxes on Property b.

Taxes on Goods & Services (i+ii+iii) i.

General VAT Stamp taxes (Financial & Realty) Excise Tax ii.

Specific (Gaming taxes) iii.


Taxes on Use of Goods/Permission to Use Motor Vehicle Taxes Company Taxes Licence to Conduct Special Bus.

Activity Marine License Activities c. Taxes on Int'l Trade & Transactions Customs & other import duties Taxes on Exports Departure Taxes Other d. General Stamp Taxes NON-TAX REVENUE (e+f+g+h+i+j) e. Property Income Interest & Dividends Revenue Gov't Property f. Sales of goods & services i.
Fees & Service Charges General Registration General Service Immigration Land & Building Legal Customs Port & Harbour Health Other Fees ii.

Other g. Fines, Penalties & Forfeits h. Reimbursements & Repayments i. Misc.

& Unidentified Revenue j.
Sales of other Non-Financial Assets TOTAL TAX & NON-TAX REVENUE GRANTS CAPITAL REVENUE GRAND TOTAL [a] Budget FY2020/21 [b] [c] July – March [b] -[c] FY2020/21p Actual FY2019/20p Actual Variance [b]/[a] % of Budget (518.0) 11.6 (402.2) (379.4) (268.9) (4.3) (80.1) (14.4) (8.4) 2.8 2.6 (13.6) (0.1) (123.2) (60.4) 14.9 (103.6) (0.0) (4.3) (9.3) (2.1) (1.7) (0.4) (14.1) (10.3) (0.2) (0.7) (4.2) (0.2) (0.3) (4.7) 0.2 0.1 (0.2) (3.8) 0.6 3.2 3.3 (0.1) (527.3) (0.1) 0.0 (527.4) 68.3% 92.2% 70.2% 68.8% 70.5% 63.9% 79.7% 48.0% 85.1% 72.0% >100% 86.5% 59.4% 56.0% 59.7% 78.1% 7.0% 0.0% 22.5% 79.1% 46.9% 17.6% 97.3% 72.2% 75.6% 79.7% 74.1% 86.2% 57.1% 88.1% 62.4% >100% 9.2% 0.2% 48.8% 78.0% 99.9% >100% 0.0% 69.8% 0.0% 0.0% 69.8% 9 NINE MONTH REPORT ON BUDGETARY PERFORMANCE FY2020/21 JULY - MARCH BOX B: QUARTERLY TRENDS IN GOVERNMENT REVENUE PERFORMANCE & POLICY INITIATIVE During the third quarter of the fiscal year (Q3 FY2020/21), government tax revenue collection improved in line with the reopening of the Bahamian economy as the tourism sector began to open in earnest and pandemic related restrictions were eased.
Of the $1,034.5 million in tax receipts, approximately 26.1 percent was collected in the opening quarter of the fiscal year,with the proportion improving to 29.0 percent in the second quarter and peaking at 44.9 percent in the third quarter.

This trend was primarily explained by a third quarter boost in collections of real property taxes, increasing year-on-year by $11 million for the quarter due to the the Real Property Tax Forgiveness Programme.
The third quarter of the fiscal year has also seen a steady recovery in VAT and business licence receipts, in the context of broadening gains in economic activity.

TAX REVENUE (a+b+c+d) a.

Taxes on Property b.

Taxes on Goods & Services (i+ii+iii) i.

General VAT Stamp taxes (Financial & Realty) Excise Tax ii.

Specific (Gaming taxes) iii.

Taxes on Use of Goods/Permission to Use Motor Vehicle Taxes Company Taxes Licence to Conduct Special Bus.
Activity Marine License Activities c. Taxes on Int'l Trade & Transactions Customs & other import duties Taxes on Exports Departure Taxes Other d. General Stamp Taxes Real Property Tax (RPT) Forgiveness Programme QI QII QIII YTD On March 1, 2021, the government announced the RPT Forgiveness Programme, which provided waivers to Bahamian and non-Bahamian property owners in The Bahamas who are in arrears.
The Programme seeks to boost the collection of outstanding property taxes, by incentivizing property owners, many of whom have been adversely impacted by the COVID-19 pandemic, to become compliant.

The Programme is set to expire on May 31, 2021.


10 NINE MONTH REPORT ON BUDGETARY PERFORMANCE FY2020/21 JULY - MARCH Expenditure Developments a. Recurrent Expenditure Recurrent expenditure increased by $129.6 million (7.2 percent) to $1,939.9 million during the nine months to March of FY2020/21, as compared to the same period in the prior year—representing 75.4 percent of the targeted spend (see Table 3).
§ Compensation of employees contracted by $61.0 million (10.6 percent) to $513.1 million, for 68.5 percent of the budget target.

The decline in compensation to end-March relative to the same period in the prior year is largely explained by the $22.8 million one-time lump sum payment to eligible Government employees during the prior budget cycle.
During the period, reductions were also seen in discretionary allowances ($11.2 million), special employment programs ($4.4 million), summer employment ($3.7 million), new appointments ($2.0 million) and overtime ($0.9 million).

The government settled $52.3 million in payment arrears in the nine months end-March 2021.

Since the start of the program, approximately $289.6 million has been settled versus the total scheduled $315.6 in arrears payments.
Settlement of Arrears $350 $300 $250 $200 $150 $100 $50 $0 $88.8 $112.7 $52.5 $184.6 $204.2 $213.7 $226.9 $237.3 $255.2 $282.7 $289.6 YTD Sep YTD Dec YTD Mar YTD Jun YTD Sep YTD Dec YTD Mar YTD Jun YTD Sep YTD Dec YTD Mar FY2018/19 FY2019/20 FY2020/21 Note: Payments of arrears are included across several expenditure categories.

§ Spending on the Use of Goods and Services firmed by $15.5 million (4.2 percent) to $381.1 million and represented 68.3 percent of the annual budget.
o Travel and subsistence charges were lower by $3.0 million (35.1 percent) at $5.5 million (58.1 percent of budget), largely owing to the travel restrictions necessitated by the COVID-19 health and safety protocols.

Similarly, Tourism Related charges contracted by $5.9 million (89.4 percent) to $0.7 million, for 8.3 percent of budget.
o Supplies & Materials outlays declined by $11.5 million (34.5 percent) to $21.8 million and 51.9 percent of budget—in line with government’s COVID-19 induced expenditure restraint measures.

11 NINE MONTH REPORT ON BUDGETARY PERFORMANCE FY2020/21 JULY - MARCH o Services related spending were reduced by $10.0 million (8.1 percent) to $113.9 million and 61.1 percent of budget, also owing to discrete expenditure savings measures.
o Finance charges were elevated at $52.7 million, compared with a budgeted $25.0 million, and were largely explained by increased financing costs associated with government borrowing activities.

o Special Financial Transactions, which include the settlement of government arrears, firmed by $6.8 million (10.6 percent) to $71.2 million.

During the fiscal year, $52.3 million (70.0 percent) in arrears have been settled, as against the $75.1 million budget target.
9-Month Comparison of Recurrent Expenditure vs Budget for FY2020/21 (B$M) $800 $700 $600 $500 $400 $300 $200 $100 $0 $749 $558 $397 $371 $513 $381 $264 $330 $359 $348 $141 $103 Compensation Use of G&S Interest Subsidies Pensions & Grat.

Other Budget FY2020/21 § Public Debt Interest grew by $21.8 million (9.0 percent) to $264.1 million or 66.6 percent of budget.
By currency, $92.6 million (35.1 percent) represented payments on foreign currency obligations and $171.5 million (64.9 percent) was for Bahamian debt.

§ Government subsidies, which represent transfers to Government-owned and/or controlled entities or private sector partners who provide goods and services to the general public, increased by $19.2 million (6.2 percent) to $330.0 million and represented 89.0 percent of the budget allocation.
o Subsidies to public non-financial corporations were elevated by $22.0 million (7.6 percent) over the comparative period to $310.6 million.

Included in this amount are: $11.2 million in additional assistance to Lucayan Renewal Holdings; $2.6 million assistance to Water and Sewerage Corporation; $34.5 million in payroll and operational support for Bahamasair; $4.1 million in operational support to the Airport Authority and $4.6 million to Nassau Flight Services.
o Transfers to private non-financial enterprises and other sectors contracted by $0.5 million (2.5 percent) to $19.4 million.

12 NINE MONTH REPORT ON BUDGETARY PERFORMANCE FY2020/21 JULY - MARCH § Expenditure on social assistance benefits expanded significantly by $145.0 million (650.3 percent) to $167.3 million compared to the same period in the prior year, to settle at 121.8 percent of the budget.
The outcome is largely attributed to the extension of the COVID-19 related food and unemployment assistance programs.
TABLE 3: RECURRENT EXPENDITURE SUMMARY (B$M) [a] Budget FY2020/21 [b] [c] [b] -[c] [b]/[a] July – March FY2020/21p Actual FY2019/20p Actual Variance % of Budget (61.0) 15.5 (3.0) 0.8 (2.9) (11.5) (10.0) (0.5) 43.5 6.8 (5.9) (0.1) 0.1 (1.9) 21.8 19.2 (0.6) 145.0 (1.4) (9.0) 5.6 (14.6) 129.6 68.5% 68.3% 58.1% 76.6% 50.1% 51.9% 61.1% 54.8% 210.9% 70.8% 8.3% 68.8% 0.0% 70.8% 66.6% 89.0% 81.8% 121.8% 73.2% 81.7% 90.1% 63.6% 75.4% RECURRENT EXPENDITURE Compensation of Employees Use of Goods & Services Travel & Subsistence Rent Utilities & Telecommunications Supplies & Materials Services Minor capital repairs Finance charges Special Financial Transactions Tourism Related Local Gov't Districts School Boards Other Public Debt Interest Subsidies Grants Social Assistance Benefits Pensions & Gratuities Other Payments Current Transfers n.e.c.
Insurance Premiums TOTAL b.

Capital Spending During the review nine months period, capital outlays contracted by $30.1 million (15.2 percent) to $168.0 million, when compared to the same period in the prior year, to represent 32.6 percent of budget.

This outcome was in line with government’s efforts to secure savings through a curtailment of non-essential capital expenditure, by $100.0 million of the approved budget, for use in priority COVID-related outlays (see Table 4).
13 NINE MONTH REPORT ON BUDGETARY PERFORMANCE FY2020/21 JULY - MARCH § Capital transfers were contained by $27.8 million (38.5 percent) to $44.4 million or 21.9 percent of the budget target.

o Capital transfers included $18.6 million in support for small and medium sized enterprises; $8.7 million for continuation of Hurricane Dorian recovery efforts; and $3.3 million towards restoration of the Rand Memorial Hospital services in Grand Bahama.
§ Spending on Acquisition of Non-Financial Assets declined by $2.4 million (1.9 percent) to $123.5 million, to represent 40.1 percent of the approved budget.

o The spend on dwellings other than buildings advanced by $3.8 million (8.1 percent) to $50.1 million, for 45.7 percent of budget.

o Transport equipment outlays firmed by $1.8 million (445.3 percent) to $2.2 million and 19.3 percent of budget, with $1.5 million associated with the acquisition of sea vessels.
o Land improvement expenditure was higher at $5.0 million from $0.5 million in the comparable period of FY2019/20.

As part of the government’s economic stimulus efforts, investments in park and ground improvements, of $4.4 million, exceeded the $0.9 million budgeted allocation.
TABLE 4: CAPITAL EXPENDITURE SUMMARY (B$M) Capital Transfers Acquisition of Non-financial assets Fixed Assets Buildings other than dwellings Other structures Transport equipment Other Machinery & equipment Land Improvements Other Fixed Assets Land TOTAL [a] Budget FY2020/21 [b] [c] July - March [b] -[c] FY2020/21p Actual FY2019/20p Actual Variance (27.8) (2.4) (2.4) 3.8 (1.9) 1.8 (2.1) 4.5 (8.4) 0.0 515.5 168.0 198.1 (30.1) [b]/[a] % of Budget 21.9% 39.5% 40.1% 45.7% 35.8% 19.3% 43.5% 89.5% 33.3% 0.0% 32.6% 14 NINE MONTH REPORT ON BUDGETARY PERFORMANCE FY2020/21 JULY - MARCH Financing Activities Net Increase in Liabilities In meeting its operational requirements, the Government incurred a $1,312.1 million net increase for the review period.
§ Budgetary financing requirements were met through gross borrowings of $2,392.5 million compared to $936.5 million in the same period of the prior fiscal year.

o Domestic bond issuances aggregated $425.0 million, of which $302.7 million was used to refinance maturing bonds.

o Two international bond issuances totaled $825.0 million—US$600.0 million (October) and US$225.0 million (December).
o New foreign currency loan financing of US$752.0 million comprised: a US$246.0 million bridge facility (July) used to retire and assume direct responsibility for the Bahamas Electricity Corporation’s (BEC) legacy debt of an equivalent amount; a US$248.0 million bridge loan facility (August); a US$200 million policy loan from the IDB under a programme to boost small business resilience and environmental protection (September); drawings of US$2.6 million (December) under a $25.0 million credit enhancement programme for micro, small and medium sized enterprises; US$15.4 million draw down (December) on the IDB US$80 million loan for reconstruction and resilience in the energy sector; and a US$40 million policy loan from the CDB (November).
o Drawings on existing loans aggregated US$32.1 million—of which $19.2 million represented the undisbursed balance under the skills and jobs programme loan from the IDB, which was redirected to assist with the government’s COVID-19 support of b usinesses in maintaining employment levels.

o Short-term domestic financing comprised $23.6 million in Treasury bills and $334.9 million in Central Bank advances.

§ Debt amortization payments were higher at $1,080.1 million from $585.4 million in the prior year.
o The government repaid the US$248.0 million bridge financing, out of the proceeds from the US$600 million bond transaction (October).

o An aggregate US$147.1 million and $0.8 million was repaid in foreign currency and Bahamian dollar loans, respectively.

o Bahamian Dollar repayments included reductions in Central Bank advances ($249.8 million); bond ($350.0.million) and Treasury note ($48.2 million) redemptions and Treasury bill conversions ($36.2 million).
§ As a result of net borrowing activities, the Direct Charge on the Government – exclusive of interest rate adjustments, increased by $1,312.3 million to $9,503.5 million or 82.8 percent of GDP at end- March 2021, as compared to 66.0 percent of GDP at end-June 2020.

15 NINE MONTH REPORT ON BUDGETARY PERFORMANCE FY2020/21 JULY - MARCH Table 5.
CHANGE IN LIABILITIES (By Currency and Instrument) (B$M) FY2020/21: July – March Bahamian Dollars Bonds Treasury Bills/Notes Bank Loans Central Bank Advances Foreign Currency Bank Loans International Bonds Loans from Int'l Dev.
Agencies Borrowings 783.4 425.0 23.5 0.0 334.9 1,609.0 494.0 825.0 290.0 Repayment Net Change 685.1 350.0 84.5 0.8 249.8 395.2 378.2 0.0 17.0 98.3 75.0 (61.0) (0.8) 85.1 1,213.8 115.8 825.0 273.0 TOTAL 2,392.4 1,080.3 1,312.1 Composition of Government Borrowings for FY2020/21 T-Bills 1% Advances 14% Loans 33% Bonds 52% Loans Bonds T-Bills Advances Contribution to Sinking Funds During the nine months to March of FY2020/21, the government took advantage of favourable market conditions for US Treasuries and sold a portion of the sinking fund portfolio and realized capital gains of $11.3 million.
These capital gains were reinvested in the sinking fund.

At end-March 2021, the three (3) arrangements earmarked for scheduled retirement of external bonds held a cumulative value of $195.4 million, while the funds set aside for the two (2) local arrangements stood at $13.3 million.

16 NINE MONTH REPORT ON BUDGETARY PERFORMANCE FY2020/21 JULY - MARCH Ministry of Finance Legislative Initiatives The Government made significant progress in its public financial management policy reform agenda.
Outlined below in Box C is the status of the various legislative initiatives.

KEY FEATURES + DEVELOPMENTS STATUS BOX C LEGISLATIVE INITIATIVES Public Procurement Act, 2021 Public Debt Management Act, 2021 Public Finance Management Act, 2021 This legislation establishes a public procurement board, a digital procurement platform, and an electronic to modernize existing procurement systems with international best practices.
registry, vendor This legislation consolidates and amends existing laws for public debt management, as well as implement a governance framework oversight of Government debt activities, which are to be guided by defined objectives.

The Act will also establish a Debt Management Unit Debt Management and Committee the requires and production of an annual Debt Management Strategy Report.
a the roles legislation the This replaces administrative segments of the existing Financial Administration It clearly and Audit Act, 2010. specifies and responsibilities of financial officers, enhances reporting requirements and accountability expectations the public service, and across for solidifies criminal penalties financial malfeasance matters.
in public Statistics Act, 2021 This legislation establishes the Statistics National Bahamas Institute and a National Statistical the System and will facilitate establishment of standards for collecting, compiling, analyzing and publishing official statistics.

The Bill was passed in both the Upper and Lower Houses of Parliament in March and the Act comes into effect 1st September 2021.
The Draft Public Procurement Regulations have been drafted and are undergoing final review for presentation to Parliament during the May 2021 budget presentation.

The Bill was passed in both the Upper and Lower Houses of Parliament during March and the Act comes into effect 1st July 2021.

Work is ongoing to finalize the accompanying regulations in time for presentation to the Parliament during the May 2021 budget presentation.
The Bill was passed in both the Upper and Lower Houses of Parliament during March and the Act comes into effect 1st July 2021. the Draft Public Finance Work on Management Regulations is substantially complete, and the document is undergoing final review.

The government intends to finalize the document for presentation to Parliament during the May 2021 budget presentation.

The Bill was passed in both the Upper and Lower Houses of Parliament during March and the Act comes into effect 1st July 2021.

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