Budget focused on bounce back from Covid-19
Government spending will top the $1 billion mark in the next financial year, the Minister of Finance revealed yesterday.
Curtis Dickinson said that estimated revenue for the year was $998.8 million and that a Budget deficit of $124.5 million would be run up.
He added that – apart from an increase in fees at the Registrar of Companies – “there are no other meaningful increases to the cost of government services or other fees and taxes.”
Delivering the 2021-22 Budget Statement, Mr Dickinson said: “There is a fragility to local finances that cannot be further strained by increased taxes.”
He pledged that the gross public debt would be held at $3.35 billion at the end of the next financial year – the same level as the end of this cycle.
He added that tax breaks for struggling sectors would be maintained and land tax levels would stay at the present level for the next ten years.
Mr Dickinson said that vacant posts in the Civil Service would be defunded to save about $20 million.
He added: “This will mean the public service will trim its sails to meet the actual tasks required, managing public expectations accordingly, and the funding that remains will be put to better use achieving greater value for money.”
Mr Dickinson said: “Given the sustained impact of the Covid-19 pandemic, revenues are forecast to decrease by 11 per cent or $123.3 million.”
He added: “The current account balance, after interest, is budgeted at a debt in the amount of $31.8 million.
“This represents a decrease in the current account surplus of $97.1 million when compared with the 2020/21 Budget, but a $143.5 million improvement over the revised Budget estimate for 2020/21.”
He said the deficit was $120.8 million less than the revised estimate of $245.5 million for this financial year.
Programmes earmarked for continuation include the payroll tax relief for sectors hit by the Covid-19 pandemic and the tax incentives to grow jobs scheme.
Customs duty relief on imports intended for renovation of retail stores will also be maintained.
Mr Dickinson said the most significant revenue decreases would come from the continued impact of the pandemic.
He added that the slump in cruise and air travel – forecast to be down $20.7 million against the original 2020/21 Budget – as well as a drop in Customs duty of $34.4 million and a fall in payroll tax of $19.3 million were significant shortfalls.
But he predicted that the country would run a surplus Budget by 2023/24, which would get the pre-pandemic debt strategy of balanced Budgets, no increase in the debt ceiling and the use of surpluses to reduce debt back on track.
Debt service costs for the next financial year were predicted to be $127.8 million – about $5.4 million of it related to the stalled Caroline Bay resort development.
Mr Dickinson added that capital expenditure would total $92.9 million and would be a mix of repair and new work.
He said a shore centre to support a new fishing co-operative would be set up and the Mid-Atlantic Wellness Institute would be upgraded.
He added the Marine & Ports workshop and the Department of Public Transportation headquarters would also be revamped.
Mr Dickinson said that grants to community clubs and organisations would be continued.
The ministries of health, education and labour will get the largest allocations and the biggest increase will go to the Ministry of Social Development and Seniors.
Mr Dickinson added that measures to cut the cost of living were in the pipeline.
He added that the introduction of new industries and affordable access to capital for businesses and consumers would be encouraged through “measures to supporting greater competition within the banking sector”.
Mr Dickinson said: “Yes, we are still in a pandemic, but we are focused now on building the economy with a view to the future – in all its many and unknowable possibilities.
“Part of that is continuing our world class Covid-19 testing platform and delivering vaccines.
“Protecting the public health is an essential and necessary part of our economic recovery.”
Mr Dickinson added that “our new economy cannot look like our economy of the past. It must be better”.
He said: “It must not only be diversified, but must actively engage diversity.
“It must not only be stable, but must cultivate innovation.”
Mr Dickinson added: “If there are obstacles to growth, we must remove them quickly.”
He added: “During this pandemic we have welcomed close to 400 new people to our shores with one-year residential certificate and we must welcome more.
“We must welcome newcomers not only to buy our groceries and use our services, but also to bring us new skills, knowledge and capital.
“That so many have come in the midst of a pandemic is the ultimate compliment to our island nation.
Their arrival strengthens us and diversifies our community and our economy to the benefit of all.“