Bahamas economy showing ‘continued growth and resilience,’ PM Davis says

Prime Minister Philip Davis says the Bahamas economy is showing “continued growth and resilience,” citing stronger revenues, an improved fiscal balance and disciplined financial management during his contribution to the Mid-Year Budget in the House of Assembly.

“The improved revenue performance recorded over the first six months of the current fiscal year is a clear reflection of the continued growth and resilience of the Bahamian economy,” Davis said as he outlined the government’s financial position at the halfway point of fiscal year 2025/2026.

Total revenue collections reached an estimated $1.5 billion, representing a $66.6 million increase over the same period last year. Tax revenues accounted for $1.3 billion, with value-added tax (VAT) collections totaling $739.1 million at the half-year mark.

“VAT performance in The Bahamas has continued to strengthen during the first half of this fiscal year,” Davis said, noting that the improvement “has not been driven by higher rates, but by stronger compliance, more effective enforcement, and better administration across the tax system.”

He added, “This steady flow of VAT reductions reflects our commitment to the Bahamian people that where fiscal space allows, relief will follow,” referencing earlier reductions in VAT rates and the planned move to make unprepared foods fully VAT-exempt next month.

On the spending side, preliminary aggregate expenditure totaled $1.9 billion for the six-month period. The resulting net deficit stood at $342.4 million, an improvement of $25.3 million over the previous year. The primary balance also improved significantly to a $3.1 million deficit, compared to a $32.3 million deficit during the same period last year.

Central government debt rose to $12.4 billion at the end of December 2025, equivalent to 75.1 percent of GDP, reflecting net borrowing activities during the period.

Under the Public Finance Management Act, Davis reported that total outstanding obligations reached $241.9 million at mid-year. This included $60.5 million in arrears from prior fiscal years and $181.4 million in unpaid invoices from the current fiscal year.

“This level of outstanding balance reflects the interaction of project execution, support for essential services, and seasonal cash flows,” he said, adding that the Government is “strengthening commitment controls, improving cash forecasting, and prioritizing structured arrears reduction – all within the broader fiscal consolidation framework to maintain debt sustainability and deficit reduction targets.”

Addressing Opposition concerns about $265.3 million transferred into the National Investment Fund, Davis said the move had parliamentary approval.

“That transfer was fully authorised by Parliament under the Resolution passed on March 10, 2025,” he said, adding that “suggestions that the transfer bypassed Parliament or misrepresented the fiscal position are not supported by the facts.”

The prime minister also highlighted continued economic expansion, noting that real GDP grew by 3.4 percent in 2024 and unemployment declined to 9.3 percent in the second quarter of 2025.

Amid geopolitical tensions affecting global oil markets, Davis sought to reassure Bahamians about energy costs.

“Rest assured Mister Deputy Speaker, we are fully committed to working on behalf of every Bahamian to reduce the cost of electricity and fuel prices,” he said.

Tourism, the country’s main economic driver, continues to underpin growth. Davis pointed to major cruise tourism investments, including Celebration Key opened by Carnival Cruise Line and the Royal Beach Club Paradise Island launched by Royal Caribbean International.

He described the projects as part of a broader strategy to sustain economic expansion over the next three years.