Shaw Explains Basis for Revised Budget

Minister of Finance and the Public Service, Hon. Audley Shaw, said that the Government had to adjust its fiscal targets and present a revised budget of $561.4 billion, up from $555 billion, due to a number of deviations.
These include revenue and grants of $11.6 billion, having fallen short of 9.7 per cent of the original target, and 1.6 per cent below the similar period of 2008.
“Of this deviation, tax revenue was $8.4 billion (or 7.8 per cent) below budget, and only 2.8 per cent above April to August 2008,” Mr. Shaw explained, as he opened the debate on the 2009/10 supplementary estimates in the House of Representatives yesterday (Sept. 29).
Meanwhile, expenditure for April to August was $7.6 billion, some 4.3 per cent below projections, with expenditure on programmes being 24.4 per cent lower than budgeted. The fiscal deficit at $61.6 billion is eight per cent above the target of $57.6 billion.
The revised budget, which was approved by the House after an extensive debate at committee, comprises capital and recurrent expenditure of $411.2 billion, and amortization payments of $150.2 billion.
The original budget presented in April saw central government targeting fiscal deficit of 5.5 per cent of Gross Domestic Product (GDP), which was equivalent to $65.4 billion.
Government is now targeting a fiscal deficit of 8.7 per cent of GDP, equivalent to $94.5 billion, Mr. Shaw noted.
The revised 8.7 per cent is due to a projected tax revenue decline of 13.4 billion, or 1.1 per cent of GDP; delay in divestment of $12.9 billion (1.2 per cent of GDP); a projected increase of $16.2 billion in interest costs; and the downward revision in nominal GDP having resulted in a 0.1 deviation in the fiscal deficit.
“These changes resulted in an adverse deviation of 4.2 per cent of GDP. In light of these deviations, non-debt expenditure had to be cut by $10.5 billion or 1.0 of GDP as follows: a recurrent programmes cut by 4.7 per cent, or .43 per cent of GDP; and capital expenditure cut by $5.8 billion or .53 per cent of GDP,” Mr. Shaw told the House.