- This, he noted, is as a result of “better than budgeted” performances for both the central government primary surplus and fiscal deficit at the end of August.
- The Minister was speaking in the House of Representatives on Tuesday, September 29, where he tabled the Fiscal Policy Paper Interim Report for the 2015/16 financial year.
The Full Story
Finance and Planning Minister, Hon. Dr. Peter Phillips, says the fiscal operations under the Economic Reform Programme (ERP) are on track to meet the established targets for September.
This, he noted, is as a result of “better than budgeted” performances for both the central government primary surplus and fiscal deficit at the end of August.
The Minister was speaking in the House of Representatives on Tuesday, September 29, where he tabled the Fiscal Policy Paper Interim Report for the 2015/16 financial year.
He, however, highlighted “emerging challenges” relating to expenditures and revenues which, he said, the Government will need to overcome in order to ensure the continuous successful performance of agreed programme targets.
With respect to expenditures, Dr. Phillips said the main challenge arises from settlement of the 2015/17 public sector salary agreements.
This, he pointed out, following adjustments of four and three per cent respectively, for each of the two years of the contract period, up from the initial three and two per cent.
He assured that the Government will continue to “work harmoniously with public sector groups to ensure that the schedule of payments arising from these and future decisions will be consistent with attainment of the agreed ceiling of nine per cent of the Gross Domestic Product (GDP)” by March 2017.
Achieving the target, he told the House, will create the fiscal space for the Government to “appreciably increase” allocations for capital projects.
In relation to revenues, Dr. Phillips said tax inflows will be impacted by the later than anticipated implementation of transfer pricing rules; lower than expected yields from major audit operations; and the six-month postponement of and adjustment to the environment levy on domestic production.
Additionally, he said lower aluminium prices, consequent on global market slowing, will also negatively impact revenue from the bauxite/alumina sector.
“But, through additional financial distribution from self-financing public bodies and other transfers to the Consolidated Fund, the Government will seek to minimize the shortfall in revenues and grants to $2.6 billion (equating to 0.6 per cent),” the Minister advised the House.
Dr. Phillips informed the House that the projected revenue shortfalls and higher than planned compensation costs will necessitate cuts in gross recurrent programmes totalling approximately $8.6 billion.
He assured, however, that protected social spending for youth employment, poor relief, children’s homes and places of safety, and the Programme of Advancement through Health and Education (PATH), will be preserved.
The Public Sector Improvement Programme will also be prioritised to include projects which will “most significantly” contribute to achievement of priority objectives in the short to medium terms, he said.
Details of the cuts will be presented in Supplementary Estimates to be tabled in Parliament later in this calendar year.