Provisional data indicate that for the September 2002 quarter Central Government operations resulted in a deficit of $9.4 billion or 2.31 per cent of GDP relative to the Staff Monitored Programme (SMP) target of $2.3 billion, 0.57 per cent of GDP.
The primary balance to GDP ratio of 1.3 per cent was lower than the SMP target of 2.72 per cent of GDP, according to the latest Bank of Jamaica quarterly monetary policy report. The report says the primary balance shortfall reflects the inadequacy of lower than targeted revenues to support increased non-interest expenditures.
Concurrently, the current balance ratio was minus 1.90 per cent of GDP relative the SMP target of minus 0.08 per cent of GDP.
Tax revenues, which were $1.7 billion below the SMP target, accounted for 68.6 per cent of the deviation in total revenues. This was due mainly to higher than budgeted tax on interest refunds paid out by the Central Government during the quarter.
The fallout in tax revenues also resulted from delays in the implementation of legislation, which was expected to increase compliance and broaden the tax base. All other categories of revenue with the exception of grants were below their SMP targets for the quarter. Notably, tax revenues were 13.3 per cent higher than flows in the September 2001 quarter while flows from the other categories of revenue were below that of the comparable quarter of the previous fiscal year.
The 12.6 per cent increase in total expenditure relative to the SMP target was influenced by higher than targeted recurrent expenditure in which programmes and domestic interest payments were the major areas of deviation. This was partially offset by the containment of capital expenditure. Central Government financed its deficit and amortised its foreign debt mainly through borrowing from the domestic market during the review quarter.
For the first half of the fiscal year, Central Government recorded an estimated deficit of $21.8 billion or 5.38 per cent of GDP. This outturn was well above the SMP targeted deficit of $15.4 billion or 3.79 per cent of GDP.
Revenues for the first half of the fiscal year were below the SMP target for the period owing to shortfalls in all categories of revenues. Tax revenues during the first six months of the fiscal year fell short of the SMP target by 6.2 per cent but were 9.8 per cent above the comparable six-month period in 2001/2002.
Other categories of revenue reflected declines relative to levels attained during April to September 2001. Expenditure was above target for the April to September 2002 period reflecting an increase in recurrent expenditure, which was partly offset by the containment of capital expenditure.
The deviation in fiscal outturn relative to target for the first half of the fiscal year was reflected in the performance of the major fiscal indicators. The primary balance for the first two quarters to the fiscal year was 2.08 per cent of GDP compared to the targeted 3.89 per cent of GDP. The deviation was reflective of the lower than targeted revenues.
The disappointing performance of revenues was also manifested in the current balance ratio of minus 4.36 per cent of GDP relative to the SMP target of minus 2.62 per cent. The fiscal stability ratio of minus 1.43 per cent was 0.16 percentage points below the target.
