Thompson accuses Davis’ administrator of ‘selective memory’ on economic performance – Eye Witness News
NASSAU, BAHAMAS – Former Minister of State for Finance Kwasi Thomson yesterday accused the Davis administration of suffering from a serious case of “selective memory” regarding the former administration’s efforts to promote the country’s economic performance.
Thompson, Member of Parliament for East Grand Bahama, in his contribution to the supplementary estimates debate yesterday, said: “The government suffers from a serious case of selective memory. It cannot be true that everything that is wrong is the fault of the previous government, but these positive things this government seems happy enough to brag about.
The first quarter financial report shows that we earned more income than planned, spent less than planned, reduced the deficit and borrowed less.
– Former Minister of State for Finance Kwasi Thompson
Thompson noted that the recent budget snapshot noted that the country’s economic performance in the first quarter of fiscal year 2021/2022 has improved.
“In almost all areas, the country’s income has increased”, Thompson said, noting that total income for the period was estimated at $ 90 million.
“If I remember correctly, we were criticized about our revenue forecast, with some saying we couldn’t justify these revenue numbers,” said Thomson.
“It turns out that not only did we hit the target, but we surpassed the target of $ 90 million.
“The first quarter financial report shows that we earned more income than expected, spent less, reduced the deficit, and borrowed less.”
He added: “The government is also relying on the University of the Bahamas report to justify its reduction in VAT (value added tax), but what does the report actually say?
“First, it was a report commissioned by the Free National Movement (FNM). The project was actually commissioned in April. The report states that he was in fact reviewing the FNM budget and the FNM’s budget strategy.
Thompson noted that the study found that the finance ministry’s policy, as outlined in its December 2020 fiscal strategy report, could achieve economic and fiscal targets that would put the country on a sustainable positive trajectory.
According to Thompson, this report also found that the reduction in the VAT rate by two percent, from 12 percent at 10 percent, showed only slight improvements in real GDP, unemployment rates, prices and poverty levels.
He noted that the report suggested that this decision would lead to a deterioration in the current account, budget deficit and debt-to-GDP ratio, without changing the GINI ratio, which reflects an equal distribution of income between individuals and households.
“If the priority is to benefit the economy, if only slightly, the reduction in VAT must be continued,” said Thompson.
“However, and at the same time, there must be initiatives to offset tax revenues to cope with the rising deficit and the debt-to-GDP ratio.”
Thompson also rebuffed the suggestion that the Minnis administration intended to increase the VAT rate to 15% based on recommendations from the International Monetary Fund (IMF).
“The first thing to clarify is to state that none of the recommendations were taken into account by myself, the then Prime Minister or the Cabinet,” said Thompson.
“For the Prime Minister to suggest that the Killarney member consider a VAT hike is absolute nonsense. “