1. This statement provides new information that has become available since the issuance of the staff report (SM/16/110). The additional information does not change the thrust of the staff appraisal.
2. Budget communication. Prime Minister Christie presented the 2016/17 fiscal year budget to Parliament on May 25. For the current 2015/16 fiscal year (ending this June), the government expects the fiscal deficit at B$150 million, broadly consistent with the earlier budget projection (at B$141 million, about 1.5 percent of GDP). Compared to the budget projection, the somewhat larger deficit reflects lower revenue (despite strong VAT performance), higher current spending (including additional tourism concession payments), and lower capital spending. The government’s fiscal deficit estimate remains lower than staff’s expectation primarily owing to more optimistic revenue projections and lower than budgeted capital expenditure.
3. The 2016/17 budget. The budget proposes further deficit reduction next year (to $100million, or about 1.1 percent of GDP) that is expected to arrest the recent increase in public debt. At this pace, the authorities’ project the central government debt-to-GDP ratio to fall below 60 percent by 2018/19. The budget proposes “relief to consumers and businesses” through reductions in customs duties and tax concessions, as well as continued measures to modernize tax administration. The budget communication also outlines several new policy initiatives, including a training program for the unemployed; a mortgage relief program; and support for the loss-making Bank of The Bahamas, in line with the priorities identified in the staff report. As a part of the budget communication, the government also announced a framework agreement to finance and complete construction of the Baha Mar resort.