Eustace dissatisfied with 2011 Revenue and Expenditure Estimates

Opposition Leader Arnhim Eustace has expressed disatisfaction with the 2011 Revenue and Expenditure Estimates, saying that he did not agree with the Government’s anticipation of economic growth during this fiscal year.{{more}}

Eustace contends that, over the last few years, the Unity Labour Party administration has been operating on a deficit budget. The previous New Democratic Party (NDP) administration had successfully been able to operate on a current account surplus, said Eustace.

“The budget is important, as it tells the people what the Government is going to do to improve the circumstances of the people and the economy,” he said, adding that when he looked at the overall snapshot of the Estimates, he saw Government ending up with $27 million less than they need.

Eustace said the Estimates presented a “rehash” of the situation in 2010.

The Opposition Leader said the Estimates presented last week did not achieve the Government’s desired goals to make a meaningful contribution to improve the economic growth for the year.

“Last year’s (2010) budget amounted to $913 million and was hailed as the biggest ever and there seemed to be the assumption that the bigger the budget, the better,” Eustace said.

“Towards the end of his presentation, the Prime Minister indicated that the public servants were satisfied with the Estimates, but I am not satisfied,” he said.

Eustace, an economist, explained that on the current account and amortization and sinking funds, the Government was short of $105 million, down from $108 million in 2010.

He maintained the view that the country was once again going to operate on a current and cash deficit, which translates to Government having to seek funds from sources that have not been identified, or alternatively do less spending.

He noted the significant reduction in the capital spending, which was put at $176.6 million in 2011, down from $303.3 million in 2010.

“We have to look at the factors…, we are starting off with a smaller capital budget and expect significant economic growth after two years of negative growth?” Eustace questioned.

He criticized the proposed increased spending on wages and salaries, saying that it is usually recommended that salaries not exceed 50 or 51 percent of spending, but the 2011 figure of $243.62 million is past the recommended allotment.

“More and more, what is left is being squeezed,” Eustace contended.

He further explained that pension and NIS benefits now approached 80 percent of every dollar, saying that the additional 20 cents was insufficient to carry out functions.

Regarding the reduction in the allocation of funding to goods and services, Eustace noted that it was the third straight year that funding under this category has been reduced.

He was of the view that was the reason why there were issues, including the need for medication at the Milton Cato Memorial Hospital, because funding that could be used for such purchases was tied up in the payment of salaries, pensions and debt repayments.

“When you have these pressures, you come to the situation where you cannot meet other expenditures that are critical,” Eustace explained.

He said the debt owed to the private sector by the Government is a matter for concern. He charged that the Government’s non-payment to proprietors inhibited expansion on the part of the business sector, which, overall, affects the economy. He said this is likely to happen, especially in cases where private enterprises are forced into overdraft.

“So you talking about growth, the way we handle our fiscal affairs affects growth,” Eustace said. (DD)