The Freundel Stuart administration is expecting another challenging year as it seeks to further reduce the fiscal deficit, Minister of Finance Chris Sinckler has told Parliament.
Government has projected deficit of 4.4 per cent of Gross Domestic Product (GDP) this year, but delivering his report for the April 2016 to January 31, 2017, Sinckler said he expects that the figure could be even lower.
“Our hope is that, as I said at the beginning of my presentation, that we can engage in a discussion with all of the relevant authorities to ensure that we reach the targets which we’ve set ourselves, not only in relation to the 4.4 per cent of GDP in this particular Estimates document as laid out here, but that we can bring that down further so that the financing challenges associated with financing such a large deficit can be reduced to no more than about $250 million, somewhere around 2.5 per cent of GDP . . .
“Last year we projected eight per cent, we got it down to 5.1. We’re projecting 4.4 this year. We believe we can bring that down to 2.5 per cent of GDP, and perhaps even lower, depending on the type of things that we agree,” Sinckler added.
The Minister of Finance told Parliament that preliminary information from the Accountant General and the Barbados Revenue Authority indicates that current revenue was for April-January was $2.87 billion, an increase of 8.9 per cent over the previous period.
Taxes on incomes and profits realized $627.7 million, 16.1 per cent higher than the amount collected the previous year, while corporation tax increased by $25.4 million for the period under review.
With respect to income taxes, $68.2 million more was recorded for that period and withholding taxes increased by $23.4 million.
However, taxes on property decreased by $3.3 million from the corresponding period to $123.7 million. Amounts of $112.4 million and $11.3 million were collected for land tax and property transfer tax respectively.
According to Sinckler, taxes on goods and services increased by $94.6 million, to $1.43 billion. Receipts from Value Added Tax (VAT) totaled $764.4 million, an increase of $84.4 million over the corresponding period in 2015-2016.
Government earned $153.1 million in excise duties, an increase of 16.7 million above the actual outturn for the previous year.
Import duties increased by $16.8 million to $204.6 million, while special receipts also increased by $12.4 million, due in part to the collection of $19.8 million from the National Social Responsibility Levy. Non-tax revenue recorded $57.1 million, an $18 million decline from the previous year.
On the expenditure side, current expenditure exclusive of amortization was $780.2 million. This decreased by $29.7 million of 1.2 per cent from the 2015-2016 figure.
Sinckler reported that wages and salaries decreased from $604.6 million to $593.8 million. Expenditure on goods and services decreased by $8 million to $259.7 million, and the figure for current transfers decreased by 64.2 million. The main contributors to this decrease were retirement benefits, grants to public institutions and other benefits.
Capital expenditure for period under review was $135.8 million compared to $179.5 million for the previous financial year. Total expenditure was placed at $3.293 billion, compared to $3.43 billion the previous year.
Central government disbursed debt stood at $13.34 billion, or 144.1 per cent of GDP, compared to $12.18 billion for the previous year.
There was also a $6 million increase in external debt, primarily due to disbursements from the Development Bank of Latin America (CAF), and the assumption of Barbados Agricultural Management Company’s (BAMC’s) debt. These were offset by repayments on the Caribbean Development Bank and the Credit Suisse loans.
The Minister told the House that domestic debt increased by $1.1 billion, financed mainly through the issuance of debentures and short-term treasury bills. The increase also included the debt of the BAMC which was overtaken by Central Government. The net increase was attributable to the need for financing the deficit.
Total debt payments amounted to 1.4 billion, with interest payments of $642.5 million, and amortization payments of $780.8 million.
There was an overall increase in amortization payments was $43.7 million. During the period under review no sinking fund contributions were deducted.
Contingent debt of government stood at $925.1 million at the end of December 2016, compared to $1.4 billion the previous year. This decrease is attributed mainly to the guaranteed debt of BAMC which was assumed by central government, as well as the repayment of $55 million by the BTI to the National Insurance Board, Sinckler said.