Gov’t cuts salaries to hold line on expenses

NASSAU, Bahamas: Prime Minister Hubert Ingraham is taking a 16 per cent pay cut and members of his cabinet and other parliamentarians will also take home smaller paycheques as part of budget cuts designed to reduce debt.

The changes were outlined in the 2010-2011 Annual Budget tabled by Prime Minister Ingraham in the House of Assembly last week. Capital expenditure for 2010/11 has increased from US$255 million to US$265 million while recurrent expenditure is US$1.55 billion, unchanged from 2009/10.

“This is a budget that contains the most significant structural fiscal action of any budget in recent years, with the overriding objective of enhancing the nation’s economic prospects by putting its fiscal house in order on a sustained basis,” said Ingraham.

“Failure to act would jeopardize our solid reputation as an attractive destination for foreign investment, would subject us to much higher borrowing costs and would dampen prospects for stronger growth and higher standards of living. Accordingly, this budget begins to aggressively redress public finances now, by containing the growth of government debt this coming year and beginning to move the debt-to-GDP ratio back to more prudent and desirable levels over the medium term.”

Ingraham said overall allocations to government ministries, departments and agencies for 2010/11 are being reduced by 2.6 per cent.

“In order to secure the attainment of our fiscal objectives, the government is also implementing a number of targeted expenditure reductions, namely the salary of the Prime Minister is being reduced by 10 per cent and those of Parliamentarians, in both the House of Assembly and the Senate, are being reduced by five per cent; and the duty allowances of the Prime Minister and ministers are being reduced by 50 per cent,” he said.

The combination of those measures amounts to a 16 per cent reduction in take-home pay for Ingraham, a 7.3 per cent reduction for ministers and speakers, and a five per cent cut for the Leader of the Opposition and Members of Parliament.

The responsibility allowance of the Secretary to Cabinet, Financial Secretary, Permanent Secretaries and other senior public officials will also be slashed in half.

Other government workers will be affected by the cuts. Ingraham announced that public officers will not receive increments in 2010/11; promotions in the public service are being frozen, “except in special cases”; there will be no hiring of additional civil servants “except in extenuating circumstances, such as essential services”; and the positions of those public officers retiring in 2010/11 will not be filled, except in the Department of Education.

The provision for overtime is also being reduced from US$10.4 million to US$1.5 million.

Other cost cutting measures will see contributions and grants to charitable organizations and institutions being reduced by 10 to 25 per cent and subsidies to private schools cut by 20 per cent.

“Clearly, if we are to achieve our overriding fiscal objectives, all will need to manage public resources judiciously and prudently within the very stringent limits that have been established,” said Ingraham.

The government is also modifying some tax rates and administrative arrangements to acquire additional revenue.

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