Budget 2025/26: Cocktails and Dreams
The budget communication before a general election has historically been used by the
sitting government to entice and woo voters to support the governing party. Often filled
with incentives, tax relief and subsidies, the goal is to make the electorate forget if only
until the elections are over, the hardships and challenges they have faced for the last
four years.
It takes significant effort to flunk the delivery of an election budget but that is exactly
what Prime Minister Philip Davis did during his recent presentation. The constant
applause by the PLP Members of Parliament was even more disturbing as it suggests
that they failed to see what most Bahamians watching could see. From projecting
unrealistic revenue numbers to the real time celebration of the dream of a surplus to the
expectation of commendation for an attempt to fix a problem they created, Davis
delivered another underwhelming performance. It was a cocktail of linguistic
gymnastics, convoluted phraseology, dream selling, premature jubilation and political
rhetoric.
Surplus and the Unhatched Egg
The PM had barely announced his projection of a surplus for the upcoming 2025/26
fiscal year when the government’s public relations machinery kicked into high gear. One
of the flyers read “We have finally achieved a balanced budget with a surplus.” It was a
carefully designed propaganda tool aimed at deceiving Bahamians into believing that
the Davis administration had balanced the budget and achieved a surplus for the current
2024/25 fiscal year albeit the figures for the first nine months suggest that they are
unlikely to meet their deficit target of $69.8 million. Based on the mid-year fiscal update
published by the Ministry of Finance in February 2025, the deficit stood at $398 million
($404.1 million according to Davis) at the midpoint of the 2024/25 fiscal year.
In fact, what Davis actually said was “For the first time in our history as an independent
nation, a Minister of Finance will be tabling a balanced budget.” While the wording
leaves much to be desired, it was simply a projection that the government hopes to
achieve a surplus of $75.5M for the upcoming 2025/26 fiscal year. Perhaps, out of
desperation to make some type of history, the PM failed to mention that the FNM had
accomplished this feat in the early 2000s. In response to the backlash from a failed
publicity stunt, the Deputy Prime Minister sought to clean up the mess and confusion
created by the Minister of Finance on a radio talk show the following morning but alas,
the damage had been done and trust further broken. Bahamians see this for what it was:
a PR campaign centered on counting one's proverbial eggs before they hatch.
Talking about taxes and silent on others
The Finance Minister was ecstatic as he boasted about the collection of taxes and fees to
fill the government’s coffers. As at the nine-month mark, total revenue was lagging
behind at $2.5 billion or 69.4% of the budget forecast which when extrapolated for the
full year amounts to $3.3 billion. Stamp taxes increased by $12.3 million to $94.7
million, licence fees by $36.4 million to $162.7 million and taxes on international trade
and transactions by $125 million to $627.3 million. VAT receipts rose by $50.8 million
to a whopping $1 billion presumably attributable to the imposition of VAT on basic
necessities and the general increase in the cost of goods and services.
In the same token, the government’s total expenditure increased by a staggering $230.8
million to $2.6 billion. When this significant increase in spending is considered in the
context of an administration that is not transparent and accountable, the issuance of no-
bid contracts to a select few to the exclusion of the average Bahamian paints a gloomy
picture. Davis was conspicuously silent on the Grand Lucaya resort sale and the details
of the multiple BPL deals presumably because it doesn’t align with his campaign speech
veiled as a budget communication. However, it is crystal clear that the populace aren’t
feeling the high tourism cruise arrivals and lauded investments in their pockets or living
standard.
Surplus math not mathing
A look at the projections for the upcoming fiscal year reveals some startling information
that raises more questions than answers. Due to space limitation, we will consider just a
few. Davis is now projecting a surplus of $75.5 million even though he had projected a
surplus of $448.2 million just one year ago and Moody’s had predicted only a surplus of
$30.9 million. The question is: what has changed? If the economy is booming as the
government says it is and their optimism is real, why the significant eighty three percent
reduction in the projected surplus?
The Davis-Cooper administration is seeking to achieve a surplus not by tightening its
belt and fiscal prudence but by taking more out of taxpayers' pockets. The PLP
administration now plans to spend $3.82 billion dollars over the next 12 months; this is
up by $300 million from the $3.5 billion dollars initially projected. What a difference a
year and a looming election makes. Overall, the communication was lackluster and
sought to magnify the government’s plan to do what they were elected to do with
minimal major or visionary ideas. Recycled concepts were simply repackaged as
revolutionary plans.
PLP trying to fix what the PLP broke
Despite acknowledging the cost-of-living crisis in its Blueprint for Change, the PLP has
failed woefully in addressing this major challenge faced by Bahamians. The PM had
initially blamed global factors before turning on the masses by blaming our choices and
eating habits for the cost-of-living crisis. In doing so, the nation’s leader refused to take
responsibility for the role his administration has played in making the crisis worse. The
increase in the VAT rate from 0% to 10% on necessities such as breadbasket items,
medication, healthcare, feminine products and others was a bad policy decision. Added
to this, was the failure to continue the BPL hedging program which increased electricity
costs, the increase in NIB contributions and rising government fees.
The Davis-Cooper administration simply created the perfect storm for the struggling
masses over the last four years. As the general election approaches, the PLP
administration has conveniently found its conscience. Davis wants Bahamians to
celebrate the imposition of 5% VAT on items that were VAT free under the last FNM
administration. While they tout the increase in revenue earned on the backs of our
people, it appears that the PM and his colleagues don’t realize the hardship they have
caused while living their best lives. More concerning is the fact that they want credit for
trying to halfway fix what they broke in the first place.
The final and pre-election budget?
While the PM has until October 2026 to hold the next general election, this is the final
(full) budget of the current administration and it is very likely that Davis will ring the
bell before he has the opportunity to deliver another budget communication. This
budget doubles as his last and election budget before he has to face the Bahamian
people at the polls. As a veteran politician, Davis knows this and his desperation to hold
on to power means that he will pull out all stops to achieve this dream.
The political gamesmanship at play here is obvious. Bahamians will not have the final
numbers to see whether the government has achieved the surplus it has prematurely
celebrated before the next general election. In the meantime, the PLP will continue to
use this for their reelection campaign hoping that voters don’t see through the
smokescreen. The title of this piece sums up the PLP’s approach to governance since
2021: they have been sipping cocktails and eating caviar while selling dreams to the
Bahamian people.
Arinthia S. Komolafe
a.s.komolafe510@gmail.com
