KINGSTOWN, St. Vincent – Parliament on Tuesday began debating the EC$793,911,053 Estimates for the 2012 fiscal year, an increase of 0.7 per cent or EC$7.42 million over the approved budget for 2011.
Minister of Finance and Prime Minister Dr. Ralph Gonsalves, presenting the figures in Parliament on the first anniversary of the re-election of his Unity Labour Party to a third term in office, said that the estimates “are fashioned to respond to the current economic circumstances and the strategic path which this government has chosen.
“It balances restraint on the recurrent side with well-targeted capital projects, aimed at increasing economic activity in the key sectors of the economy,” he told lawmakers as the country faces a possible fourth consecutive year of economic decline.
“As we approach 2012, I urge all managers and heads of departments to pay closer attention to controlling cost, raising their work effort and increasing output,” he said.
“All of us must work harder to make the public service and more efficient and effective organisation. These estimates are sound; they are fit for the times. They combine prudence and enterprise for the development of this country and its people,” said Gonsalves, who also has ministerial responsibilities for economic development.
Gonsalves told lawmakers that the small increase in this year’s estimates arises from a 4.7 per cent increase in planned capital spending while the recurrent expenditure budget remains “relatively stable”, registering a marginal decline of 0.1 per cent or EC$820,000.
“The budget for 2012 is made up as follows: recurrent expenditure plus amortisation and sinking funds contributions EC$528, 669, 213 and capital expenditure of EC$184,915, 470,” Gonsalves said.
Expenditure is to be financed by current revenue of EC$507,334,600 and capital receipt of EC$286,576,453.
EC$29.3 million deficit
The current account is expected to run a deficit of EC$29.3 million, a 21.8 per cent fall year-on-year, that Gonsalves said is expected to be achieved “through prudent budgetary measures”.
Current revenue stands at EC$507.3 million, an increase of 0.5 per cent, which, compared to the revised EC$463.3 million budgetary allocation for this year, is expected to increase by 8.7 per cent in 2012.
Gonsalves said that tax revenue would make the largest contribution to the consolidated fund — EC$471.2 million, a 4.7 per cent increase, year-on-year.
He noted the increasing importance of taxes to government finances, adding that in 2005 taxes accounted for 89.4 per cent of government revenue but had moved to 93 per cent according to the estimates for next year.
Consequently, the estimates of non-tax contribution next year have fallen to EC$36.1 million.
“The growth in revenue from income taxes is expected to come from increase takings from corporation and individuals,” Gonsalves said.
Property taxes
He further said that taxes on property is projected to bring in EC$6.2 million in revenue, adding that this tax, “which has not been performing very well for a number of reasons, is expected to be enhanced as a result of some reforms that will take effect in 2012”, the details of which will be outlined his Budget Address on Jan. 9.
Recurrent budget
On the recurrent side of the budget, recurrent expenditure accounts for EC$528.6 million; amortisation, EC$74.3million; sinking fund contribution, EC$6 million for a total of EC$608.9 million.
Wages and salaries are increasing by 2.9 per cent, to EC$250.6 million; pensions and National Insurance Service contribution by 2.4 per cent, to EC$47 million; goods and services by 1 per cent, to EC$76.1 million and debt service by 0.5, to EC$131.8 million while other transfers have been reduced by 9.2 per cent, to EC$103.4 million.
National debt
Meanwhile, Gonsalves said that the national debt, at Sept. 30, was EC$1.22 billion, refuting claims that it had reached EC$2 billion.
The EC$1.22 billion national debt is 0.7 per cent lower than the total dispersed debt for the comparative period of 2010, Gonsalves said.
Four ministries
Capital estimates for 2012 amounts to EC$184.9 million, a 4.7 per cent or EC$8.3 million increase over the this year’s capital budget, with the ministries of Transport and Works, National Security, Seaport and Airport, Education, and Finance and Planning receiving 70.3 per cent of the spending.
Prudence and Enterprise
“…Prudence comes in a number of detailed ways. She is a lovely lady … You must date her. But if you date prudence alone, you do not get the totality of all the experience. So Miss Enterprise has to enter the picture, because you have to do things, which are to assist. Not that you are Islamic but in this matter, you have to be prudent and enterprising,” said Gonsalves, who added that the economy is expected to grow by 2 per cent next year.
The debate is continuing.