Friday 3 July, 2020

Shaw to tell country how $774 billion budget will be financed

Audley Shaw to open Budget Debate on Thursday.

Audley Shaw to open Budget Debate on Thursday.

Finance and Public Service Minister Audley Shaw will open the 2018/2019 Budget Debate on Thursday, by telling the nation how he expects to finance the $774 billion budget he tabled in the House of Representatives on February 15.

Last year’s budget was financed through a mix of revenue measures, grants, loan resources and inflows from the PetroCaribe Development Fund.

However, Shaw has said there will be no new taxes this year and the state of the PetroCaribe fund is not clear.

As is customary, the bulk of the budget will be financed through tax revenue and that is expected to top $500 billion this year. The bauxite levy, capital revenue and grants are all expected to contribute.

Chung... says country in a relatively good fiscal position compared to years past.

According to Financial Analyst Dennis Chung, any shortfall will likely be filled through borrowing. Chung is anticipating that the gap in the budget will be in the region of $60 million to $70 million.

Chung, who was speaking with Loop News during an interview, explained that the relatively small budget gap is because the country is (fiscally) in a “very good position,” today when compared to five years ago.

“The debt to GDP projected for next year should be down at around 102 per cent. We are coming from close to a 150 per cent, this accounts for why tax revenues are performing better with more persons being brought into the tax net,’ Chung said.

“The lower debt to GDP means less money is being used to service the debt thus freeing up funds to deal with other pressing matters like national security,” he added.

 “If we continue on this path, by 2026 we are projecting a debt to GDP of around 60 per cent. We would be in a much better position as a country,” said Chung.

The $774 billion budget is $58.5 billion more than the $715.5 billion that was contained in the 2017/2018 estimates, but $31 billion or four per cent less than the $805 billion that was approved in the revised estimates from last year.

Some $560 billion has been allocated for recurrent or house-keeping matters while $213.6 billion is set aside for capital projects.

As is customary, the Ministry of Finance and the Public Service has been allocated the lion’s share, with $240 billion for recurrent expenses and $155 billion for capital expenditure. Much of that amount will go towards paying down the country’s huge debt.

The Ministry of Education, Youth and Information gets the second-largest sum with $103 billion for recurrent expenses and $1.6 billion for capital spending.

And, in the face of the out-of-control crime problem, the Ministry of National Security has seen an increase in its budget to $66 billion on the recurrent side and $12.4 billion for capital projects.

The Ministry of Economic Growth and Job Creation which is headed by the Prime Minister has received $12.7 billion for recurrent and $21 billion for capital expenditure.

With no new taxes, revenues have been marked down to $699 billion. However, the Government anticipates that this will be offset by an increase in tax revenues which are projected to come in some eight per cent higher this year at $518 billion.

Get the latest local and international news straight to your mobile phone for free: