NASSAU, Bahamas – The Bahamas government says it plans to use its projected surplus in this year’s national budget to directly pay down on the country’s debt.
Michael Halkitis (File Photo)“What do we do with that US$75 million, Madam President?” Minister of State for Economic Affairs, Michael Halkitis, told the Senate as debate opened on the US$3.85 billion fiscal package.
“We see in the budget, in the estimates of revenue and expenditure this year, the debt of The Bahamas stood at US$11.461 billion,” Halkitis said, adding “so, that surplus goes directly to reducing the debt of the government of The Bahamas”.
However, the main opposition Free National Movement (FNM) say the Phillip Davis government is out of touch with the challenges facing ordinary Bahamians. The FNM has accused the government of exaggerating economic progress ahead of the next general election. The party has questioned how a government facing a $395m mid-year deficit in December, along with over US$122 million in unpaid bills, could credibly project a surplus.
But Halkitis maintained that using the surplus to reduce debt will have a clear impact on taxpayer spending.
“Again, why is this important? Madam President, you look at interest payments, the amount of money that the government people of The Bahamas have to pay just on the interest on the debt in 2017, that number was US$273 million.
“In 2025, that number is expected to be US$668 million. In 2026, it goes down to US$602 million, and by 2027 we anticipate US$565 million in interest; and so, you see the trend going downwards,” Halkitis added.
Halkitis said the decline this will help lower interest payments, telling legislators “I didn’t choose 2017 for any particular reason, it’s just that I wanted to give us a few years and to demonstrate that this goes across administrations.
“So from US$273 million, more than double in less than 10 years, it’s unsustainable,
“And so the surplus is a big deal because we can see the debt of the country begin to come down, and we know that the level of the debt has been something that has been occupying and causing concern to Bahamians for a long time.”
Halkitis said the surplus does not indicate room for financial laxity, adding “it does not mean that there’s free money or the government can just throw money around.
“All it means is that within its capacity to execute, the government has enough money to fully and adequately fund the works of the government for this year.”
Halkitis said that the deficit has steadily declined from 11.9 percent of gross domestic product (GDP) in 2020 to a projected surplus of 0.5 percent in the upcoming fiscal year. The primary balance is expected to post a surplus of 4.5 percent of GDP, and the debt-to-GDP ratio is forecast to fall to 68.9 percent by the end of the fiscal year and to 61.3 percent by 2027–2028.
The minister said the shift from the country’s largest-ever deficit in 2020/2021 to a projected surplus is a sign of “responsible leadership,” adding that the economy recorded real GDP growth of 3.4 percent in 2024, with nominal growth at 3.7 percent, alongside a record 11.2 million international visitors last year.
