Govt spending as fast as it is bringing in, finance minister admits

Government tax receipts have soared far above expectations in the first half of the financial year, but public spending has continued to outpace projections, leaving ministers balancing buoyant revenues against renewed warnings over fiscal discipline, Minister in the Ministry of Finance Ryan Straughn told lawmakers on Tuesday.

In a mid-year review of the government’s fiscal position via a Ministerial Statement to the House of Assembly, Straughn reported that government coffers are filling up faster than expected. In just the first six months of the financial year, the Mottley administration took in $2.16 billion in taxes — an impressive $373 million more than planned.

But while revenue surged, State spending also ran higher than intended. The government spent $1.91bn between April and September, around $70m over budget, with more than half a billion dollars going to State agencies and other entities. Straughn admitted that overall spending to support State agencies was $84.48m above target.

Even so, he said Barbados was maintaining stability despite an “uneven” global economy, citing the island’s ongoing growth, near record-low unemployment of 6.1 per cent, easing inflation, and “strong” foreign reserves.

At the same time, Straughn pledged that the government remained committed to tighter controls on public spending, including stricter oversight of transfers to state bodies and closer monitoring of government cash flow and arrears.

Total revenue for the six-month period reached $2.16bn, significantly higher than the $1.79bn the Mia Mottley administration had targeted for the period.

Included in that figure was a sharp rise in corporation tax collections, which totalled $639.45m — $410.35m more than the targeted $229.1m. Total tax collected on income and profits reached $933.74m, against a target of $517.6m.

On the matter of net income taxes, the government collected $274.85m, compared with the target of $265.9m. Taxes on goods and services, comprising mainly value added tax (VAT), reached $811.05m.

According to Straughn, VAT “overperformed by $19.82m”, totalling $576.33m for the period, while excise taxes “underperformed by $12.36m to reach $107.91m.

Property tax revenue fell short by $19.13m, below the target of $189.36m.

Straughn praised “administrative improvements at the [Barbados] Revenue Authority, combined with robust domestic activity, [which] resulted in stronger-than-expected revenue outturn at mid-year”.

While insisting that public spending “remained broadly manageable relative to programme objectives”, the minister said total spending for the period hit $1.91bn, some $69.35m above the limit it set of $1.84bn.

The Christ Church East Central MP told the chamber: “Wages and salaries were $405.8 million, $6.63 million below target, and goods and services were $333.79 million, $5.60 million above target. The fiscal balance recorded a surplus of $250.67 million, approximately 1.65 per cent of GDP, compared to a projected mid-year deficit of $51.04 million.”

He added: “The primary surplus was $529.1 million, approximately 3.47 per cent of GDP, compared to a projected $311.04 million.” (IMC)