**Hon. Perry G. Christie, M.P.
Prime Minister and Minister of Finance**

Prime Minister Christie, in his capacity as Minister of Finance, has presented the 2003/2004 Budget to the House of Assembly.

Recognising that the annual Communication should provide a realistic assessment of the economic situation likely to emerge during the course of the next year – because jobs and incomes and prosperity hinge on these economic developments – the Prime Minister said he hoped to convey a “cautious but realistic and confident assessment” of a steadily strengthening recovery of the Bahamian economy, in line with similar developments in the global economy. He pointed to projections by the International Monetary Fund (IMF) that the Bahamian economy will see real growth of 2.9% in 2003 and 2.5% in 2004. For 2002, growth was estimated at only 0.1%.

The 2003/04 Budget does not contain any major taxation increases and only very modest increases in a small number of fees. It is the Government’s intention to concentrate on better management of existing resources, while growing the economy, improving revenue administration and enforcement, and levying fees where appropriate to recover costs.

In an address to the Bahamas Chamber of Commerce just prior to the Budget Presentation, the Hon. James H. Smith, Minister of State in the Ministry of Finance spoke to the “built-in constraints of the national budget” — based on the fact that some 81% of the Government’s budget could be classified as fixed. This includes expenditures on public sector salaries, debt service, rents & leases, and Government-owned corporations. He said in simple terms, this means that Government has flexibility over about 20% of the budget. To affect any increase in the flexibility with which the Government could carry out its mandate, there is a need for more concentration in the revenue collection area since there is limited scope for expenditure adjustments. *”Given that high level of rigidity in the public sector, we must seriously address this issue if we are to be more responsive to the changing needs of a modern economy,”* he concluded.

Recurrent Revenue Estimates for 2003/04 amount to $1005 million as compared with the projected outturn of $910 million in 2002/03. Overall Recurrent Expenditure is $1,062 million, representing an increase of $27million or 2.6% over the provisions made in 2002/03.

According to the Prime Minister, the 2003/04 Budget reflects:-

· the continuing commitment of the Government of The Bahamas to (a) sound macroeconomic and fiscal management in a world of great uncertainties; (b) improving the welfare of the Bahamian people; (c) the creation of sustainable employment; (d) education and skills training; (e) its urban renewal programme; and (f) proper and adequate housing for all the people.

·the Government’s policies (a) of ensuring that all of the Family Islands have the facilities and adequate infrastructure which they need; (b) to listen carefully to the expectations of the people and to respond sensitively.

*”I am sure that the people of The Bahamas, in considering this Budget, will be satisfied that my Government is doing everything possible to protect the economy, to protect the more vulnerable in our society, to provide essential public services with maximum efficiency, and to levy the necessary revenue in the most efficient and equitable manner,”* he said.

**Government’s Medium-Term Social and Economic Strategy**

Mr. Christie pointed out that the budget is the vehicle for setting out the economic, financial and social programme of the Government for the next year, and placing this programme in the context of its medium-term strategy.

This medium-term strategy is to pursue sound macroeconomic and fiscal policies, thereby enhancing the competitiveness of the Bahamian economy and the attractiveness of the economy for domestic and international investment. In this connection, the Government plans to build on the 6 pillars of tourism, financial services, ecommerce, international services, manufacturing industry, agriculture, and fisheries.

*”Without question, the uncertain global environment inhibits growth and development of every economy, that of The Bahamas included. Consequently, we must be careful and patient in our expectations as long as this uncertainty continues. But we firmly believe that our prudence and patience will pay off in the sustainable development of our economy.”*

The Government views the 2003/04 Budget as the first step in implementing a “sustainable fiscal policy”, responding positively to the new challenges and opportunities arising from the less promising global environment which developed in recent years.

The Prime Minister told House colleagues that it is essential that The Bahamas demonstrates to the international community that it is very serious in its intention to bring the fiscal situation under firm control. *”The Bahamas has an A3 Rating from Moodys, and we should not jeopardise that rating in any way,”* he said. *”Indeed, that Rating is invaluable in that it confirms that the Bahamian economy is fundamentally sound, and that The Bahamas is an attractive environment for international investment.”*

The Governor of the Central Bank, Julian Francis, said yesterday the Prime Minister is sending a strong and encouraging message to the international community that The Bahamas is serious about its finances, and determined to maintain its expenditure within prudent limits. *”We have an absolute determination to hold back broad increases in Government expenditure, and also an attempt to look at particular areas in Government services that have not been subject to increases in recent times,”* Governor Francis said.