Unrealistic revenues will no longer be included in future budgets

Following the approval of the second Schedule of Additional Provision (SAP) this year, the House of Assembly has decided to implement a new policy to not include ‘unrealistically predicted revenue streams’ to the annually budgetary process.

Premier and Minister of Finance Dr Natalio Wheatley made the announcement in the House of Assembly on Tuesday, following the passing of the SAP, which made adjustments to revenue collection that was expected and approved in the territory’s 2022 budget.

“Expected collections from revenue initiatives such as gaming and gambling, asset mining, and medicine on marijuana were included in this budget. But these initiatives are not ready to deliver revenues. We have made a policy decision moving forward not to include any measures in the budget, which have not realistically gotten to the point where revenues will be realised within a short period of time,” Dr Wheatley said.

Meanwhile, the Finance Minister noted that adjustments in the SAP had to be made because of the temporary reduction in import duties which was done to ease the plight of the population amid the COVID-19 pandemic.

“Notwithstanding the deduction of these revenue estimates, collections were trending slightly above budget expectations. [It’s] now estimated $352,106,535. This was attributed to the successful reopening of our tourism economy following the pandemic period, the increase in economic activity in our local business community, stamp duty from land sales and a steady inflow of revenue from the financial services industry,” Dr Wheatley said.

“The economy has commenced its road to recovery, recovery which will not happen overnight; as is the case with most economies throughout the world. While there’s an uptick in revenue, there’s also increased expenditure due to the resources needed to manage the territories waste collection and disposal, the influx of illegal immigrants and detainees, funds transferred to the National Health Insurance to prevent the collapse of the scheme, the cost of reform, the increase in fuel prices, and the intended subsidy to assist residents with a reduction in the electricity bill due to the increase in global fuel prices,” he added.

Social assistance budget increased

Dr Wheatley further said the Social Assistance Programme Facilitated by the Social Development Department was increased by approximately $1,301,000.

“This increase is partially funded from the transfer of funds from the $396,893 and the repurposing of the Ministry of Health income support programme in the amount of $485,883,” he said.

The Finance Minister said even tighter control measures on spending are now required for the rest of the year. He added that given the continued uncertainties surrounding the financial services sector and the ongoing war in Ukraine, constant monitoring of the territory’s revenue collections will need to continue as the actual numbers become available.

“Revised scenarios may even need to be considered before the end of the year, and even further adjustments to the 2022 estimate will be required to match any further declines in collections and spikes in expenditure due to any unplanned events that may occur throughout the rest of the year,” Dr Wheatley said.

Goods and services provisions reduced

He highlighted goods and services are being reduced from $96,132,679 to $89,636,959. This represents a net seven per cent reduction of $6,495,720. He also said the deferment of COVID-19 spending for the Housing Assistance Programme and the reduction in legal expenses are the primary reasons for the reduction in the expenditure category.

“The 2021 approved budget allocation for employee compensation was $131,087,849 while the restated figure is $121,733,976. This represents a decrease of seven per cent or $9,353,872. This reduction is primarily due to a past policy decision [whereby] it was deemed necessary not to fund vacant posts, which were estimated at $9,476,972,” the Finance Minister said.

“Grants increased by 12 per cent or $10,193,763. Ten million dollars of this allocation is to assist the NHI in meeting its outstanding obligations to private providers. Property and other expenses are being reduced by $2,337,086 due to adjustment in the vote for compensation expenses,” Dr Wheatley added.

The Premier noted that a recurrent expenditure of $7,108,284 is to be expended in a variation of the appropriated amount which includes a sum of $1,800,600 from the Reserve Fund and $1,926,100 for the Miscellaneous Purposes Fund to be charged against the Consolidated Fund of the territory.