NASSAU, Bahamas - Prime Minister Phillip Davis Wednesday presented a US$3.89 billion budget to Parliament saying it is introducing new measures that respond directly to the challenges faced by the Bahamas and moving it closer “to the aspirations we share for tomorrow”.
Prime Minister Phillip Davis presenting budget to Parliament on Wednesday (CMC Photo)Davis told legislators that the total revenue amounts to US$3.89 billion or 23.6 per cent of gross domestic product (GDP) while total expenditure is estimated at US$3.82 billion or 23.1 per cent of GDP.
He said of this, recurrent expenditure accounts for US$3.44 billion or 20.8 per cent of GDP, and capital expenditure for US$376.3 million or 2.3 per cent of GDP.
Davis said the fiscal surplus is estimated at US$75 million or 0.5 per cent of GDP, with the primary balance showing a surplus of 4.5 per cent of GDP. He said given this, the debt to GDP ratio has been projected at 68.9 per cent of GDP at the end of the financial year 2025-26.
“For the first time in our history as an independent nation, a Minister of Finance will be tabling a balanced budget, evidence that fiscal discipline can coexist with a bold vision for national progress,” Prime Minister Davis told legislators, adding that his administration had accomplished this without sacrificing development priorities or slowing the pace of investment.
“We did it without resorting to reckless cuts, or firing dedicated employees, just to claim a quick win. This balanced budget is the result of careful planning, responsible leadership, and a steadfast commitment to the Bahamian people,” Prime Minister Davis said, noting that “it is our continued commitment to fiscal responsibility that will allow us to continue making game-changing investments in our country and in our people”.
Davis said that this year’s revenue measures are structured around six major themes, namely affordability; environmental health; marine protection and development; modernizing operations; tax measures and private cruise destinations.
He said that due to the recent effects of global inflation, economies around the world, The Bahamas has faced significant price increases, resulting in Bahamian families struggling “under the weight of high prices for food, household items, and basic hygiene necessities.
“This administration understands their difficulty, and in this budget, we are acting decisively to bring relief to the people. As part of the ongoing efforts to promote affordability, we will be reducing the value added tax (VAT) rate to five per cent on a range of products that are crucial for the well-being of our citizens”.
He said these include baby diapers; feminine hygiene products; prescription and non-prescription drugs including medications for those with chronic conditions as well as medical and dental supplies such as needles, blood pressure machines, lancets, dental cements and other dental fillings.
Davis said that other medical and therapeutic items such as cell therapy products will aso benefit from the measure that will take effect on September 1, this year and “aimed at ensuring that Bahamians of all ages and stages of life can access essential products without the added burden of high taxes”.
He said under the amended VAT Act, the government is also extending VAT relief on building materials for religious institutions, in recognition of their vital role in supporting and uplifting communities.
“This VAT relief will come in the form of VAT exempt imports or as a refund system if purchased locally. In addition, customs duty is being removed from digital and changeable letter signs, making it more affordable for them to enhance their visibility and communication efforts.”
Prime Minister Davis said the the government is also reducing customs duties on dozens of essential items used by Bahamians on a weekly basis and that his administration is also removing the customs duty on refractory cement, mortars, and concrete, and similar compositions as well as copper fittings, screws and nuts and bolts.
“We are also taking steps to reduce the cost of fuel sources used by numerous households. We are removing the 45 per cent excise duty on butane fuel mostly used in portable stoves. Many Bahamians rely on this fuel for a hot meal, whether day-to-day or during emergencies” Prime Minister Davis said, adding “this is part of our broader commitment to build resilience and affordability into everyday life, especially where it may help the most”
He said that the Bahamas is committed to reducing greenhouse gas emissions by 30 per cent by 2030 and achieving net-zero emissions by 2050, in line with the Paris Agreement.
“Our clean energy transition includes expanding renewable energy, promoting electric vehicles, and improving energy efficiency through key initiatives and projects,” Davis said, noting that duty exemptions on household appliances with the highest level of energy efficiency will be granted.
“Freezers, air conditioners, freezers, and gas and electric water heaters will be duty free, once confirmed that the appliance will make a positive impact on climate change initiatives,” he said, adding that these exemptions encourage Bahamians to adopt cleaner technologies, directly contributing to our climate goals and a sustainable future.
Prime Minister Davis said that in addition to the these measures, prefabricated homes can now be imported with prior approval from Ministry of Works.
“Every Bahamian has the right to safe food, clean environments, and healthy communities. To support this, we are introducing new measures in the upcoming fiscal year that are practical, fair, and more focused on protecting public health,” Prime Minister Davis said, noting that while the Bahamian marine environment is one of the country’s greatest treasures, yet, for far too long, its use has been under regulated and its protection underfunded.
“We are introducing targeted measures to ensure that those who benefit from our marine space also contribute to its sustainability. To better protect our marine environment and support long-term stewardship of our waters, we will introduce a framework to implement an Environmental Levy on seabed leases for commercial activity to reflect the true value of our marine territory”.
Davis said in addition, a cruising permit fee for tenders and boats 25 feet or larger will be put into place, ensuring every vessel has its own valid permit and that the government will introduce environmental penalties to discourage harmful practices and preserve the health of our marine ecosystems.
“These measures are not about discouraging use; they are about responsible use. They are about ensuring that those who enjoy our waters also help to preserve them and for future generations of Bahamians to inherit an ocean that is abundant, healthy, and protected. We owe it to our people, and to the sea that sustains us.”
Prime Minister Davis told legislators that the award-winning Debt for Nature Conservation transaction has unlocked US$124 million in funding for marine conservation without increasing the debt burden.
He said over the next 15 years, annual savings from this agreement will be directed to the Bahamas Protected Area Fund, which will allocate resources to agencies tasked with safeguarding our marine ecosystems.
“These funds will begin to support the implementation of pre-established conservation targets and ensure long-term environmental stewardship in the upcoming fiscal year,” he said, adding that the projected environmental impacts of this initiative are substantial.
He said this would include enhanced management of 6.8 million hectares of Marine Protected Areas, representing nearly 17 per cent of our nearshore environment, the restoration of critical mangrove ecosystems, which serve as natural buffers against storm surges and provide vital nursery habitats for marine as well as strengthened resilience to climate change, particularly in coastal communities vulnerable to rising sea levels and extreme weather events; and the establishment of a US$20 million conservation endowment by 2039, ensuring continued funding for marine protection beyond the 15-year term.
Prime Minister Davis said that to strengthen enforcement, the government will create a Maritime Revenue Unit within the Ministry of Finance. In addition, members of the Royal Bahamas Police Force, the Royal Bahamas Defence Force, Port Officers, and other designated authorities will be empowered to issue notices, impound non-compliant vessels, and, where necessary, dispose of such vessels at the owner’s expense.
Prime Minister Davis said that the budget is not only about providing relief, but it is intended to building a smarter, fairer, and more modern Bahamas.
“This is why this government will put in place the proper policies and frameworks that were long needed. We will establish the Asset Disposal Assessment Unit which will examine physical government assets and recommend the optimal method for disposal. They will recommend whether a public asset should be transferred to another public entity, sold, recycled, destroyed, or any other method they will see fit. ”
He said the Asset Disposal Assessment Unit will assist in the promotion of accountability, honesty, and transparency for public assets which are no longer of its purposed use.
“ In this budget, we are taking meaningful steps to modernize how government works, how it taxes, how it charges, and how it serves,” he said, adding “when it comes to Real Property Tax, fairness is our guiding principle.
“Owners of derelict properties will be eligible for a waiver or credit on all outstanding property tax arrears once those properties are repaired and made habitable again. To ensure transparency and fairness, we will put in place a pre-approval process to confirm the property’s derelict status before any repairs begin.”
He said to promote equity among the Real Property Tax base, the government is better defining “owner-occupied” and removing its seasonality by replacing it with a defined time period for foreign homeowners.
“Foreign homeowners will qualify for the partial owner-occupied exemption for property values up to US$300,000 if they stay more than 90 days in The Bahamas. If they stay more than 183 days, full exemption will be applied, which includes both the residential cap, and the US$300,000 exemption tied to value.”
