DAVIES

Finance minister Dr. Omar Davies beamed over his ministry's performance for the fiscal year at a press conference two weeks ago, but that was before central government fiscal numbers for September this year showed revenues falling short of projections by $2 billion, almost derailing a near perfect run for the first half of the 2006-07 fiscal year.

Revenues fell behind target largely as a result of tax refunds being paid to pension funds, which are exempted from the tax on interest earned on investments and which only started receiving repayments this September.

The Government not paying over the withholding tax earlier this year created a $3 billion buffer in the first three months, showing higher than expected earnings.

However, in September, tax on interest collected by the state was $840 million lower than targeted, although for the six months tax on interest was $1.3 billion higher than budgeted. Ministry officials had told this newspaper two months ago that this revenue stream was expected to come in line with projections before end of year.

Tax earnings from personal income tax, or PAYE, and corporate income tax were both behind projections for the month under review, $400 million and $200 million respectively.

As a result, PAYE was running behind for the six months by $1.5 billion and corporate tax was below projections by $580 million.

Other major revenue streams for the Government were dead-on projections during September. Both GCT and Custom Duty, at $4.8 billion and $1.3 billion, were the same as projected.

Overall, revenues and grants were $2.7 billion behind projections for the six months to September 30 this year, but were 16.5 per cent, or $13.8 billion higher than the comparative period last year.

The Government continued to rein in expenditure largely through curtailed capital expenditure, which resulted in a $2 billion savings for September and $6.4 billion savings for the six months.

This, alongside the $1.6 billion savings on wages and programmes helped the Finance Ministry shave $7 billion off its planned expenditure for the six months.

The result was a small fiscal surplus - $345 million, which was $1.3 billion lower than projected - during the month of September, to pull back the negative fiscal balance to $16.6 billion for the first half of the fiscal year.

This was $4.4 billion lower than the deficit that was programmed for the current fiscal year and $2 billion lower than the deficit during the comparative period last year.

camilo.thame@gleanerjm.com