December 16, 2011
$793.9 million Estimate for 2012 passed in House

The Estimates of Revenue and Expenditure for a $793,911,053 budget for 2012 was passed late Tuesday, December 13, in the House of Parliament.{{more}}

The figure represents a marginal increase of 0.9 per cent or $7.42 million over the approved budgeted amount for 2011, Prime Minister and Minister of Finance Dr Ralph Gonsalves explained.

He attributed the increase to a 4.7 percent increase in planned capital spending, but said that the recurrent expenditure budget was expected to remain relatively stable, registering a marginal decline of 0.1 per cent or $820,000.

The Recurrent Expenditure, inclusive of amortization and sinking fund contributions, amounts to $528,669,213, and current expenditure is $184,915,470, the prime minister said.

“This is expenditure is financed by the current revenue of $507,334,600 and capital receipts totaling $286,576,453.”

The current revenue represents a modest increase of 0.5 per cent over the budgeted revenue for 2011 the prime minister explained.

“However, when compared to the revised revenue budget for the current year of $463.3 million, the 2012 revenue budget is expected to increase by 8.7 per cent,” he told members of the House.

Gonsalves outlined the details of some of the new initiatives contained in the Estimates.

These include two new programmes: Within the Ministry of Finance and Economic Planning and under the International Financial Services Authority (IFSA), a subvention of $1.6 million has been provided to fund the operations of the Financial Services Authority (FSA). Secondly, funds have been budgeted for the establishment of an embassy in the Bolivarian Republic of Venezuela.

A total of $3.44 million has also been allocated to the Banana Services Unit within the Ministry of Agriculture under the Black Sigatoka eradication programme.

The prime minister also outlined new staff positions, which include 15 new posts under the Ministry of Health, Wellness and the Environment and 6 in the Ministry of Education.

The 2012 recurrent estimates have a fiscal current account deficit of $21.3 million, which according to Gonsalves, is 21.8 per cent below the budgeted deficit for 2011.

“The improvement in the budgeted deficit has been achieved through prudent budgetary measures,” he explained.

Tax revenue is expected to be the largest contributor to the Consolidated Fund, yielding $471.2 million in collections or 4.7 per cent over the 2011 figure, while revenue from non-tax sources is expected to generate $21.3 million.

Non-tax revenue continues to fall, Gonsalves explained, and is expected to generate $36.1 million in 2012.

Taxes on income and profits are expected to recover, with collections from this category of tax to generate $123 million in 2012 compared to $112.3 million in 2011.

“The growth in revenue from income taxes is expected to come from increased takings from corporations and individuals,” Gonsalves said.

He further stated that property taxes are expected to bring in $6.2 million in revenue; taxes on international trade are expected to generate $196.4 million, up 10.4 per cent of the 2011 figure.

Value Added Tax, Import and Excise Duties are expected to perform well in 2012, and taxes on domestic transactions are expected to contribute $115.8 million to the public revenue Gonsalves said.

Collections from licenses are expected to amount to $29.7 million with yacht, vehicle, drivers, and telecom and broadcast licenses, contributing $22.1 million or 74.0 per cent of the revenue from this source.

The total estimated recurrent expenditure, inclusive of amortization and sinking fund contributions is $608,995,583.

“A review of the main economic categories of the recurrent expenditure reveals that wages and salaries, pensions and NIS, goods and services and debt service are registering increases of 2.9 per cent, 2.4 per cent, 1.0 per cent and 0.5 per cent respectively when compared with the 2011 approved budget,” the prime minister said.

Salaries have been budgeted for a 2.7 per cent increase, but given the prevailing circumstances, the prime minister said that no provisions have been made in the 2012 Estimates for any increase in salaries for public servants.

“In fact at a meeting with the trade unions representing all public sector workers held on December 9, 2011, there was a general consensus by the unions to defer to 2012, the remaining 3 per cent of the salary increase, which was to be paid from January 1 this year,” Gonsalves explained.

He further explained that by June next year, he will be meeting with the unions to determine whether the fiscal and economic situation would allow for the payment of this increase.

“It was agreed with the Unions that the payment, if made in 2012, it will be made retroactively. Of course, the automatic increments paid to all paid public servants will be paid in 2012,” he said.

The Capital Estimates amount to $194.9 million and represents a 4.7 per cent increase, or $8.3 million increase over the 2011 figure.

Gonsalves indicated that four ministries account for 70.3 per cent of the capital estimates and these are the Ministry of Transport and Works, Ministry of National Security Airports and Seaports, Ministry of Education and the Ministry of Finance and Economic Planning.

“The 2012 Estimates are fashioned to respond to the current economic circumstances,” the prime minister said.

“It balances restraint on the recurrent side with well targeted capital projects aimed at increasing economic activity in the key sectors of the economy,” he continued.

He urged all managers of all ministries and departments to pay closer attention to controlling cost and to raising their work effort and increasing output.

“All of us must work harder to make the public service a more efficient and effective organisation,” Gonsalves said.

Debate on the Appropriation Bill will begin at 4:00 p.m on January 9, 2012 at the House of Assembly. (DD)