Keith Collister, ContributorWITH ONLY two months left in the current fiscal year, the achievement of even the Government's revised deficit target of two per cent is looking increasingly challenging.
While January reported the first surplus this year of $653 million, it was still almost $3 billion below the projected surplus for the month of January of $3.558 billion. This makes the fiscal year-to-date (April to January) deficit a huge $28.48 billion, or $16.657 billion more than the budgeted deficit of $11.913 billion for the period. As February's projected surplus, at less than $100 million, is negligible, even if the Government achieved the surplus targeted for the month of March of $11.819 billion, making the final total deficit likely to be a minimum of $16.5 billion, or higher going on the past trends for the year.
To improve on this estimate, the central government will either have to realise further savings on the expenditure side or improve tax revenue collections over the final two months of the fiscal year.
And the supplementary budget signals no room for significant further expenditure restraint. On Tuesday this week, the supplementary estimates were tabled in Parliament. Recurrent spending estimates were increased by about $2.3 billion, which was offset by a nearly $3.1 billion reduction in estimated capital spending, with the result that the total budget has been cut by $877 million, to $346 billion (the later figure including debt repayment).
Recurrent expenditure actually rose in several areas significantly more than projected, the main area of savings (other than some minor savings in some diverse areas) being due to significant savings in interest expense from a lower than projected exchange rate.
Wages are now above budget (which is likely to continue due to the additional payments agreed on), capital expenditure has already been cut from the $17 billion programmed, tax revenues are unlikely to recover significantly in the short run, and interest rates still appear to be on hold.
TAKEN FROM THE FINANCIAL GLEANER - FRIDAY, MARCH 10, 2006
