Macroeconomist Breaks Down 2026/2027 Budget

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NASSAU, BAHAMAS – Government still claims that it’s still on track for a surplus once the Fiscal Year 2025/2026 wraps up in six weeks.

In his budget presentation, Finance Minister, Michael Halkitis, announces a total revenue estimate of $4.4B and total expenditure of $4.1B, yielding a projected fiscal surplus of $223.1M.

The government has framed this budget around “affordability.”

The complete removal of V.A.T from unprepared and uncooked food items on April 1, 2026, the zero-rated V.A.T. treatment for first-time homeowners to multi-unit properties like duplexes and fourplexes, provided one unit is owner-occupied.

Then, also the slashing of duties on household plastics, sanitary items, and elder care equipment like chair lifts were done under the previous Davis adminstration.

However, do these translate into real savings for consumers?

Macroeconomist Therese Turner-Jones, who spoke on the show On The Record, had this to say:

Therese Turner-Jones – Macroeconomist

“There we have blanket, across-the-board subsidies, and I mentioned this previously that unprepared foods whether it’s broccoli, cauliflower, celery, sweet peppers, all of those items that I’m using to cook with, and everybody else is using to cook with.”

“If I’m in a higher income bracket than you Jerome I’m getting subsidized when I don’t need to get subsidized. The government’s losing revenue on someone like me when the person they really want be subsidizing is the person who’s earning half of the income that I’m earning.”

Then there’s capital infrastructure, where health care facilities works, and other important projects including the glass window bridge, takes up the bulk of the allocated funds.

Therese Turner-Jones – Macroeconomist

“The weakest part of this budget is the capital side because it’s less than 3% GDP, extremely low as a share…and a GDP the size of the Bahamas I think we should it should be at least 7% which is also low but anything below 10% is not a big number for capital expenditure.”

Government also touts various credit rating improvements from rating industries like Moody’s and S&P, but will this budget keep us on the path to investment upgrades?

Therese Turner-Jones – Macroeconomist

“It should, but I want to remind Bahamians of where we’re coming from, we used to be AAA rated, we used to be investment rated, so the fact we are not AAA rated country anymore, means that we pay more and we borrow from our capital market or anywhere, and that doesn’t just affect the government, that affects rebar in the country.”

“So the fact that we are being upgraded is a good thing, it’s a positive, but that’s not so unusual given that we are coming off a very, very, very difficult economic period after COVID.”