NASSAU, BAHAMAS — Fidelity Bank (Bahamas) President Gowon Bowe has cautioned against celebrating the government’s reported $39.3 million fiscal surplus before questions surrounding the accounting treatment of National Investment Fund (NIF) expenditure are resolved, warning that inconsistencies in financial reporting could undermine confidence in the country’s fiscal position.
Bowe, in an interview with Eyewitness News, stressed that the government’s June 2026 Monthly Fiscal Summary Report, which recorded the country’s first fiscal surplus since independence, contains important disclaimers indicating that the figures have not been independently verified and remain subject to change.
“In effect, these are figures that have just been populated by the management team but haven’t had any scrutiny applied to them. That’s not different from any of the other months,” Bowe said. “This is the first time they are saying that they have reported a surplus. So, before we start having celebrations, I think the first thing to note is that these figures are not audited and are subject to change.”
The government reported a $39.3 million surplus for the 2025/2026 fiscal year, compared to an $84.8 million deficit the previous year. However, Bowe questioned whether the reported fiscal outcome adequately reflects expenditure undertaken through the NIF, particularly given the accounting principles outlined in the Ministry of Finance’s report.
He noted that the report specifies a modified cash basis of accounting and states that capital works are expensed when incurred, raising questions about whether the same treatment has been applied to expenditure through the Fund.
“The reality is that all of the conversations we’ve been having around the National Investment Fund indicate that there’s a significant amount of expenditure, just by the Minister of Finance’s statement himself, that the National Investment Fund has actually carried out. But that’s not reflected in these numbers,” Bowe said.
He argued that the NIF, as a special purpose vehicle wholly beneficially owned by the government, should be consolidated in accordance with applicable accounting rules.
“So the reality is that we have to be very, very careful about promoting an outcome when there’s inconsistency in accounting that certainly has not yet been explained up to this point,” he said.
Bowe’s comments come amid continuing scrutiny of the NIF, with the government previously indicating that approximately $310.9 million had been used for infrastructure and public investments through the Fund.
He stressed that the accounting questions must be resolved before the reported surplus can be properly assessed, particularly given its relatively narrow margin.
Bowe also pointed to the government’s newly introduced Domestic Minimum Top-Up Tax (DMTT) as a significant factor behind the reported surplus.
The tax generated $68.6 million during the fiscal year, falling $61.5 million short of the government’s $130.1 million budget projection.
“The second key point is that the actual surplus is being driven by the collection of the domestic minimum top-up tax, the absence of which would have led to a continuing deficit,” Bowe said.
Without the $68.6 million collected from the tax, the government’s reported $39.3 million surplus would instead have been a deficit of approximately $29.3 million, assuming all other reported revenues and expenditure remained unchanged.
Bowe also raised concerns about the absence of a detailed explanation for the tax’s underperformance, suggesting that outstanding regulatory and certification requirements may be delaying payments from multinational companies.
“The reality is that the domestic minimum top-up tax has not yielded the results that they budgeted, and there’s no explanation as to why that has been the case,” he said.
He explained that multinational companies must be satisfied that tax payments made in The Bahamas will be appropriately recognised by authorities in their home jurisdictions, allowing them to avoid being subjected to additional taxation on the same income.
“The regulations and guidelines have not yet been put in a form that allows all of the international companies to be satisfied that they will get their tax certification once they’ve made payment,” Bowe said.
He suggested that the relatively low collections should not necessarily be interpreted as an indication that companies are unwilling or unable to meet their obligations.
“What I will say is that the nature of the businesses that owe this tax is that, one, they’re not short of funds. Two, they are certainly not going to abscond in terms of not paying their taxes because they are public entities that would suffer dire consequences from doing so. And three, they’re generally good corporate citizens,” he said.
Bowe added that uncertainty surrounding the required documentation may be the principal obstacle to payment.
“So I think the collection level is more an indication of the ambiguity or continued uncertainty as it relates to the documentation and certification that is necessary for an international company to receive in order to get credit for the fact that they paid the minimum tax in a particular jurisdiction,” he said.
Despite his concerns, Bowe acknowledged several positive developments in the fiscal report, particularly the government’s debt management performance and its ability to secure financing domestically.
He said the successful raising of debt financing in the domestic market had allowed the government to avoid entering volatile international capital markets, where uncertainty surrounding interest rates, currency movements and geopolitical developments continues to present challenges.
“The debt financing that has taken place has been successfully raised in the domestic market, which means that we haven’t needed to participate in the U.S. market, which right now is going through a tremendous amount of turmoil,” Bowe said.
He also expressed confidence that the government’s debt obligations were being properly recorded, noting that borrowing from third parties provides an additional level of transparency through records maintained by financial institutions and relevant agencies.
However, Bowe cautioned that improved revenue collections require further examination to determine whether the gains are sustainable.
He pointed specifically to the collection of outstanding Value Added Tax arrears, noting that such revenue represents a one-time recovery rather than a guaranteed recurring source of income.
“They spoke about improved collection of VAT arrears, but arrears are one-time. So, if you’ve cleared the arrears, is there a similar amount to be collected going forward? And it’s silent on that front,” Bowe said.
He also called for greater explanation of expenditure increases and continued financial support for state-owned enterprises, arguing that the government’s fiscal reporting should move beyond the presentation of figures to provide a clearer assessment of underlying financial performance.
Bowe suggested that the Ministry of Finance adopt an approach similar to investor and analyst calls conducted by publicly traded companies, allowing interested parties to examine fiscal developments, emerging risks and areas requiring corrective action.
He said the absence of current audited government financial statements further reinforces the need for caution when interpreting the reported surplus.
“All numbers being presented are what I would give the benefit of the doubt and say are best estimates, but all of them are still subject to independent verification and validation,” Bowe said.
He maintained that resolving the accounting questions surrounding the NIF was essential to protecting the credibility of the government’s financial reporting.
“From that perspective, I think we need to move past the bravado of saying we’ve achieved a surplus, particularly when we have not yet answered the questions around inconsistent accounting,” Bowe said.
“That is more critical, certainly for our credibility and certainly for the trust factor that people will have in the financial reporting.”