In the letter, then Financial Secretary Ehurd Cunningham said the subventions have created a fiscal burden untenable under the current economic situation.
The government has asked its agencies to cut their budgets by 10 percent right away.
This follows a call by international rating agencies for the government to take bold and tangible action to reduce spending and slash the deficit.
“During the medium term the government is committed to eliminating the deficit and reducing the growth in national debt,” the letter said.
“For this goal to be realized all entities within the government including public corporations and statutory agencies must contribute.”
The institutions were asked to submit a financial plan to the government by January 31 that showed a reduction in subventions by 10 percent in the 2013/2014 fiscal year, and 25 percent in the next fiscal year.
The letter states that the savings should be achieved without any reduction in quality of service to the public or a forced reduction in headcount.
Minister of State for Finance Michael Halkitis noted on Monday that the government has asked the organizations to present a cost-saving proposal.
Halkitis was adamant that the letter was simply a request for these establishments to reduce their reliance on government endowments, but were not mandatory budget cuts.
Essential areas like the police force, social services and the Princess Margaret Hospital were not asked to cut their budgets, he added.
“[The letter] does not say that we are cutting them,” he said. “What we are doing is, we are asking them to look at their budgets and identify some savings and come back to us with a proposal.”
Halkitis said the request for financial plans from the agencies and corporations was not the same as ordering them to slash their budgets. He said the government simply gave corporations and agencies a benchmark to meet.
“We said aim for a cut of 10 percent,” he said. “That does not mean that if they don’t come back we will automatically cut them 10 percent. We are giving them a goal to reach for.
“We don’t think it’s unreasonable to tell someone who is getting money from the taxpayer, ‘please in this upcoming budget year, take a look at your operations, dig deep, be as creative as you can and see whether you can identify 10 percent in savings’.”
One of the organizations the government has asked to cut back is The College of The Bahamas (COB).
Some observers have criticized the government for asking COB to cut its subvention when the Progressive Liberal Party pledged to double the nation’s investment in education and training.
That promise was made repeatedly on the campaign trail ahead of the May 2012 general election.
However, Halkitis said this criticism was based on “erroneous information”.
“COB is one component of an education system,” he said when asked if the proposed budget reductions were evidence that the PLP administration is not now in a position to begin doubling the investment in education.
“We go from preschool all the way up to The College of The Bahamas and if we ask them to look at their budget to identify some savings in the subvention, theoretically we can take some of those savings and invest them in early childhood education, in special education, in building a new high school, if they can identify the savings.
“So again, I don’t think it is a drawback off the promise to double the investment in education.”
Senior administrators at COB have proposed a tuition increase of $25 per credit, per year over the next two years in light of the government’s request that the institution cut back.
The administrators also want a hiring freeze for non-critical positions and a moratorium on new programs, among other things.
Halkitis said he hoped COB would be able to reduce its dependance on government funding without making a college education out of reach for the average person.
“We don’t want any across the board increases in fees that would cause poor Bahamians not to be able to access The College of The Bahamas,” he said.
“The overriding thing we need to understand is that we have a fiscal situation that has grown to such a point we have a gap and we need to start closing that gap. Every one of us has to look at our operations and see how we can save.”
Reprinted from Nassau Guardian