First quarter fiscal performance confirmed that the Bahamian economy continues its steady recovery with revenue outcomes exceeding expectations. Gains from the uptake in economic performance were owed to the resurgence in the travel and tourism market worldwide. Further, the combination of successful vaccination strategies, locally and other in countries, are resulting in the loosening of travel and other COVID-19 related restrictions worldwide. Consequently, this cautious and measured paced of opening in the local and global economy has positively supported upticks in domestic business activities.
This outcome for the first quarter is encouraging as the country continues to recover from such devastating events. Even though the country is still plagued with the impacts of Hurricane Dorian and the persistence of the COVID-19 pandemic on the social and economic environments, the data demonstrates positive movements in the economy signaling the beginning of a sustained recovery.
The revenue performance in the country, which stood at $92.0 million ahead of projections, will be further boosted by increased revenue policies that will be announced and implemented shortly, alongside improved revenue administration efforts with the reintroduction of the Revenue Enhancement Unit (REU). The REU is expected to increase intake by $200 million over the next five years, or roughly 2 percent of GDP.
Total revenue performance for the quarter was driven by a combination of gains in real property taxes, VAT collections and excise taxes. Property taxes expanded by $12.1 million and accounted for about 13 percent of the budget. The relaxation of the lockdowns and health and safety restrictions resulted in increases in VAT receipts by $160.0 million to $294.7 million or 34.9 percent of the budget. Excise taxes expanded by $26.9 million or 11.4 percent of the budget. These and other increases raised total revenue to $572.8 million, accounting for 25.5 percent of the budget target.
Prudent expenditure management remains a tenant of the post-COVID fiscal management plan, which also prioritises COVID relief provision for employees and households as they weather the impacts of these exogenous factors. Social assistance benefits and other COVID support programs have elevated spending by the government, by roughly $39.4 million during the quarter. Overall expenditure grew by $89.0 million or 14 percent to $726.2 million.
Taken together, the deficit position stood at $153.5 million at the end of the quarter, which is $182.8 million less than the year prior - mostly in line with the projected deficit at 16.1 of the budget target.
The Ministry of Finance continues to craft and evaluate policies and administrative techniques that will support the growth and expansion of the economy. These numbers are indicating that although there is a ways to go, the recovery is steady and the proper use of scare and valuable government funds will result in a more innovative and sustainable economic climate for Bahamians.
The Ministry invites and encourages the public to visit the national Budget Website (www.bahamasbudget.gov.bs) to view the fiscal snapshot and report.