The Bahamas Government is simply too big and getting bigger

First Published: 2009-10-17

The Bahamas Government is simply too big and getting bigger

At a recent international event Prime Minister Hubert Ingraham announced the Government is borrowing $150 million a month. This news has caused some to sit up and take notice of the country’s finances.

For many years the Nassau Institute has expressed disagreement with year over year annual budget deficits. Deficit spending enables expansion of government into areas best left to the private market. One example is expansion into the tourist business by the Hotel Corporation that after huge losses eventually became bankrupt.

Now the country is facing a severe economic downturn due to forces beyond its control, and there are no reserves for the proverbial "rainy day".

As noted in March this year, since 1991 the National Debt of The Bahamas increased from $870 million to $3 billion, a staggering 244.8 percent increase over 18 years or an increase of $118 million per year.

The projected increase for 2009/2010 the National Debt approaches the $4 billion mark which makes it 50% of Gross Domestic Product. Coupled with a slowing economy and reduced GDP the future is bleak.

The projected debt level, and possible reluctance of International Lending Organizations to continue supporting the country’s finances raises concerns about parity of the Bahamian dollar with the US dollar.

What must be done to convice the lenders that The Bahamian Government is commited to getting control of its finances?

Bahamian Government Expenditures – 2002/3 to 2008/9:

Over these seven years, the government has spent some $9.1 billion dollars in nine broad categories as follows:

General Public Service – $2.6 billion for 28% of spending

Defence – $280 million for 3% of spending

Education – $1.8 billion for 19% of spending

Health – $1.5 billion for 16% of spending

Social Benefits and Services – $528 million for 6% of spending

Housing – $56 million for 1% of spending

Other Community Social Services – $103 million for 1% of spending

Economic Services – $1.5 billion for 16% of spending, and

Interest on Debt – $883 million for 10% of spending


Analysing the numbers a little more we see growth is rather dramatic in the following broad categories:

General Public Service – 51.38%

Education – 64.47%

Health – 73.33%

Economic Services – 52.32%

Interest on Debt – 63.95%


Click HERE to see charts & graphs for the above figures.

Source: Central Bank of The Bahamas and


Clearly, throwing money at our country’s problems is not solving the core issues faced.

If it hasn’t already done so, Government must take immediate steps to reduce spending. The pain will be felt by government employees, and those depending on government contracts for new spending. Their pain will be no different from the many Bahamians working part time or have lost jobs and whose mortgage payments are falling behind.

Reducing the fiscal load of a government too big is imperative. It’s a load the country simply cannot continue to bear.

What must be done to convince the lenders that the Bahamian government is committed to getting control of its finances?

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