Parliament on Tuesday approved Estimates of Revenue and Expenditure for 2014 totalling EC$911.57 million, amidst a suggestion by Opposition Leader, Arnhim Eustace, that the Budget is being inflated ahead of general elections, constitutionally due in 2015.
“In this year, Mr. Speaker, 2013, we had a budget of 799 million. Now, we have another sudden jump to 911 million. … We now put it down to bunching,” said Eustace, an economist and former minister of finance, noting that in 2010, the year of the last election, the Budget also jumped from EC$750 million to EC$913.3 million.
The Estimates represent a 14.1 per cent increase over the approved Budget for 2013, and Prime Minister and Minister of Finance, Dr. Ralph Gonsalves, said the increase is due to a 45.5 per cent hike in capital expenditure, largely because of spending on the EC$652 million Argyle international airport, scheduled to be completed next year.
Gonsalves prefaced his presentation of the Estimates Tuesday morning by referring to the three years of negative growth from 2008 to 2010 and the “marginal growth” since then.
There will also be a 5.2 per cent increase in recurrent spending, he told Parliament.
Recurrent expenditure and amortization and sinking fund total EC$654.44 million and capital expenditure, EC$257.13 million.
Gonsalves said that expenditure is to be financed by recurrent revenue of EC$520.5 million and capital receipts of EC$291.07 million.
There are no new initiatives or programmes in the recurrent estimates, but Gonsalves announced that 102 new staff positions will be created.
He said the new staff positions are “absolutely necessary and desirable” and include police, Coast Guard and fire department personnel.
The Estimates contain a current account deficit of EC$28.1 million, an increase of 2.7 per cent, which Gonsalves said is “manageable”.
Recurrent revenue stands at EC$520.5 million, 2.4 per cent more than the approved 2013 Budget.
Tax revenue and current revenue are expected to contribute EC$464 million to the Consolidated Fund. The figure is 1.2 per cent, or EC$5.8 million, lower than the approved Budget for 2013.
“I want to emphasize that we have been very cautious in our projections on this. We didn’t want to overestimate, we prefer, in these circumstances, to err on the lower side,” Gonsalves told lawmakers.
He said intake from non-tax revenue is expected to increase by 45.5 per cent — to EC$56.5 million — and the government is expecting to collect EC$189.7 million from taxes on international trade, while inflows from taxes and incomes and profits will account for EC$14.5 million, slightly below the 2013 figure.
Taxes on domestic transactions will contribute EC$115.3 million, 2.2 per cent or EC$2.6 million lower for this group of taxes.
This is as a result of the transfer of Airport Service Charge revenue to the International Airport Development Company — some EC$4.1 million annually.
Wages and salaries account for EC$271.4 million, while pensions and National Insurance Services payments total EC$52.2 million.
Gonsalves said that the recovery in the world economy is slow, very uneven, and very tentative.
Regional economies, particularly those that rely heavily on services, are in a condition of low growth, no growth, high debt for the most part, vulnerability from natural disasters and manmade changes to the climate, and from the instability in the world economy, he further said.
He said that the economy registered “marginal growth” in 2011 — after three years of decline — and a 1.5 per cent increase in 2012, with a repeat of that future expected for this year and 2 per cent growth in 2014.
The first half of this year has seen growth in value added in agriculture, resulting from increased production of root crops, vegetables, bananas, and livestock, Gonsalves said.
There has also being increased value added in the manufacturing and production sector, with beer production increasing by 72 per cent, animal feed increasing 7 per cent and flour by more than 10 per cent.
The tourism sector, however, saw mixed results, with a 7.8 per cent decline in stay over arrivals from the Caribbean, because of air travel cost and a downturn in regional economies, Gonsalves said.
But there has been an uptick of 3.1 per cent in arrivals from Canada and 1.8 per cent from the United Kingdom.
The arrival of yacht passengers grew 2.7 for the first half of this year, lower than the 3 per cent of 2012.
“So, that’s the context, broadly speaking, of our estimates,” Gonsalves said, adding that the full context will be presented in the Budget in on Jan. 20, 2014.
But Eustace, in his response, said he sees a clear trend emerging, and told lawmakers that he is sometime “wont to wonder whether I should participate in some of these debates.”
He said that after looking at the Estimates for 2014, and the figures for other years, including 2010, he sees “a clear pattern which has developed.
“And when I look at that pattern, there are a number of issues is striking,” Eustace said, noting that the Estimates are critical because they deal with the finances of the government — what it proposes to spend, expects in revenue, what it is spending on and with what objectives, and where it is going to get the revenue to do so.
“We have a practise here in St. Vincent and the Grenadines under this administration where sometimes we have sudden spurs in the Budget … then it begins to decline in subsequent years.
“And it makes it very difficult for persons to try to forecast what we are trying to achieve. We need to recognise, Mr. Speaker, that persons in the private sector, and persons who have different interest in terms of our country’s development, look at these matters,” Eustace said.
He, however, said that with the sporadic increases in the Budget, it is very difficult for businesses to use the Budget as a guide to what they should import.
“I have come to the conclusion, Mr. Speaker, that we shall continue to dither and we will continue to have negative and low growth, based on this kind of approach to our budgeting.
“We already know that the circumstances in our world are difficult and therefore our ability to manage what resources we have and come up with solution to the many problems is often manifested in the way we present and manage our budget; what policies it represents.
“So you come to the Parliament and you have a big Budget and that is supposed to give the impression that a lot of money is around, we are moving on, we don’t have difficulty in raising resources, but that’s not so, Mr. Speaker,” Eustace said.
“The increase in 2010 when we had the biggest Budget in the history of St. Vincent and the Grenadines, — 913 million — also was a period when we had very low growth in St. Vincent and the Grenadines and the Budget did nothing to change that. We are still in that position today,” Eustace said.