Government is on course to rake in more revenue for the 2015/2016 fiscal year than originally estimated.
And according to Minister of Finance and Economic Affairs Chris Sinckler this was concrete proof that Government’s fiscal adjustment programme was working and the economy was going in “the right direction” amidst a “sea of misguided criticisms”.
With about two weeks to go before the current fiscal year comes to an end, Sinckler reported that Government was expecting to rein in the deficit to about 4.2 per cent, down from the 5.8 per cent recorded at the end of financial year 2014/2015.
Boasting of Government’s achievements within one financial year, Sinckler said the revised current revenue for 2015/2016, on an accrual basis, was now $2.771 billion, of which $2.570 billion was tax revenue and $201.7 million was non-tax revenue and grant income.
“Total expenditure is expected and projected to be $4.239 billion, of which $2.980 billion is current expenditure exclusive of amortization, and $400.9 million is capital expenditure. The revised negative operating balance is therefore $379.1 million, representing 4.2 per cent of GDP,” said Sinckler.
“It is expected that $1.273 billion or 81.1 per cent of the $1.570 billion of overall deficit will be refinanced from domestic sources. The balance of $297.6 million will be influenced from external sources,” he reported.
Sinckler was giving his provisional report of the finances for the current financial year as he led off debate on the 2016/2017 Estimates of Revenue and Expenditure in Parliament this morning.
He said taxes on property were expected to increase by $20.9 million to reach $143.5 million, while taxes on goods and services were expected to increase by $137.1 million to reach $1.253 billion.
“The increase in taxes on goods and services is mainly due to increases in the Value Added Tax and the Excise Tax of $32.9 million and $76.3 million, respectively,” he said.
“Taxes on income and profits are expected to increase by $23 million or three per cent for the corresponding period last year. It is mainly due to the increase in income tax of $36.2 million. Conversely, we have had a reduction in withholding tax, which is projected to decline by ten per cent,” added Sinckler.
He also reported that the removal of the Municipal Solid Waste Tax after March 31 would result in a decline of about $36.9 million or 42.8 per cent to $49.3 million in terms of Government’s special receipts.
“Taxes on international trade, we realized $218.6 million, a decrease of $4.5 million or two per cent and non-tax revenue is expected to decrease by $91.2 million to $180.6 million.
“And this of course is going to be part of the injection of the $75 million that is expected from the sale of the Barbados National Terminal Company in relation to the special dividend,” explained Sinckler.
He added that expenditure on wages and salary was projected to decrease by $10.2 million to reach $740.9 million at the end of 2015/2016. Meantime, expenditure on goods and service is expected to increase by $12.8 million or 3.8 per cent to $353 million.
“Current transfers are expected to increase to $44.8 million or 13.3 per cent over the actual amount of 2014/2015 to $1.147 billion, reflecting Government’s effort to accelerate the pace at which arrears in the system are paid down,” said Sinckler.
“Total debt payment for 2015/2016 is expected to be $257.7 million or 18 per cent more than the previous year. Total interest costs are projected at $680.1 million, an amount of $26.3 million more than recorded for 2014/2015, while amortization payments are expected to increase by $231 million. This increase in amortization is primarily as a result of a repayment of the public loan . . . which was borrowed in 1993,” he explained.
The Minister of Finance also reported that capital expenditure was expected to increase by $81.6 million or 47.6 per cent to $252 million in 2015/2016. This amount is $3 million more than was approved by Parliament. At the same time, capital assets are expected to increase by $17 million to $74.5 million. However, that figure is $30.7 million below the amount approved for the year, he pointed out.
He said acquisitions were projected to be $7.1 million, an increase of $0.6 million over the period 2014/2015.
“This amount is, however, $3.3 million less than the amount approved for 2015/2016,” he added.
Meantime, Government’s debt has gone up by $841 million. Sinckler further acknowledged that there was a $12.5 million increase in the country’s external debt, compared to the same period for the previous year.
“Total debt payments in April 2015 to January 2016 amounted to $1.433 billion with interest payments of $583.1 million, amortization of $849.1 million and sinking funds contribution of $113.1 million. Interest payments saw a marginal net increase of 0.3 per cent primarily as a result of the maturing external facilities,” added Sinckler.
He agreed that the island’s debt was still at an unacceptable level and therefore there was still a lot of work to be done to reach the ultimate goal of sustainable economic growth.
“The reality is that our deficit is still a bit too high and our GDP growth is not high enough in order for us to begin to see a downward movement in the debt we have,” he conceded.