Government revenues rose nearly 5 per cent in the first half of the fiscal year while public spending fell.

The Ministry of Finance today released its half-year fiscal update and said it was broadly on track to meet targets set in last February’s 2015/16 budget.

During the April through September period, Government ran a deficit of $98.7 million, down from $116.7 million for the corresponding period last year.

The Ministry added that the economy is growing and the prospects for further growth look favourable.

Revenues for the six months through September totalled $464.2 million, an increase of $20.7 million, or 4.7 per cent, from last year’s first half.

“It should be noted that the increase in revenue is due to a larger collection in customs duty, payroll tax and passenger tax, which are offset by lower receipts in all other revenues,” the Ministry stated.

“In general, total revenues are tracking in line with budget estimates and the strength in payroll tax and customs duty receipts increases the chances of meeting the total revenue target of $931 million for the current fiscal year.”

Spending is tracking slightly below budget estimates, the statement added.

Current expenditures, excluding debt service, were $455.6 million for the six-month period, down by $3.8 million, or 0.8 per cent from the same period last year.

The Ministry added that this had been achieved despite the ending of the furlough deal with public-sector unions — under which staff were taking off one unpaid day per month — that generated significant savings last year.

“The current year reduction is therefore due to proposals and other budget reduction measures taken in the 2015/16 Budget,” the statement added.

The Ministry said financial assistance expenditure was tracking higher than budgeted.

“Other potential unexpected and unavoidable expenditures in current account expenditures in 2015/16 are being closely monitored,” the Ministry added. “To the maximum extent possible, these items will be covered with current budget allocations.”

However, capital expenditure is up by $2.2 million from the first half of the previous fiscal year. This was attributed to spending on the redevelopment plan for LF Wade International Airport and projects related to the America’s Cup.

Debt servicing costs through the half-year period made up the bulk of the deficit, totalling $84.9 million, up by $4.3 million from last year. This was made up of $58.8 million in interest payments and a $26.1 million contribution to the Sinking Fund, an entity designed to pay down principal on long-term public debt.

“The $58.8 million paid in interest expense represents 12.7 per cent of the revenue collected for the period,” the Ministry added.

“For comparative purposes, it should be noted that the average for countries rated similar to Bermuda is 4.1 per cent of revenue collections.”

The statement added: “Excluding debt service, Government recorded an $8.6 million current account surplus for the first six months of the year, the first time this has happened in seven years.”

Gross debt was $2.25 billion at the end of September.

In its economic summary, the Ministry said: “Along with The America’s Cup, the proposed reform measures in the areas of employment, international business, tourism and construction are all expected to have a positive impact on the economy beginning in 2015 and beyond.

“All of these measures will help the economy to eventually grow and in turn assist the Government in its goal of sustainable growth and debt reduction.”