Parliament, on Wednesday, began debating Estimates of Revenue and Expenditure for 2020, amounting to EC$1.2 billion, which includes a 2% salary increase for public workers and several new job openings.
The EC$1,186,351,151 fiscal package, announced by Minister of Finance Camillo Gonsalves, represents an increase of 11.2% over the EC$1.067 billion budget approved for 2019.
The budget is made up of recurrent expenditure inclusive of amortisation and sinking fund contributions of EC$875,583,941 and capital expenditure of EC$310,767,210.
The budget will be financed by current revenue of EC$680,039,100 and capital receipts of EC$505,312,051.
Current expenditure, exclusive of amortisation and sinking fund contributions is EC$678,033,515, while current revenue is EC$680,039,100.
“As a consequence, there is a modest current account surplus of $2 million in these estimates,” the minister said.
Current revenue amounts to EC$680 million — 306% or EC$25 million higher than in 2019.
“The improved revenue performance in 2020 is reflective of predicted real economic growth projected for the year and stronger and more efficient efforts by the main revenue agencies, to collect taxes that are due and payable,” Gonsalves said.
He noted the passage, last December, of the Tax Administration Procedures Act and other regulations, adding that the government hopes these will increase the efficiencies of revenue and tax collection.
He said that revenue from non-tax sources is expected to contribute EC$585.5 million to the government coffers while non-tax revenue is expected to bring in a further EC$94.4 million.
Tax revenue is expected to grow by 3% with all the major tax types expected to contribute as follows: taxes from income from profits, an increase of EC$3.4 million or 2.1%; taxes on goods and services — EC$9.2million (5%); taxes on international trade and transactions — EC$5 million (3.2%).
Non-tax revenue is expected to contribute EC$94.4 million, a 7% increase over the 2019 budgeted amount.
Of this amount, sales of goods and services is projected to generate EC$78.3 million, while revenue from non-tax sources is expected to see inflows from property income of EC$10.4 million, and other revenue of EC$10.2 million in taxes.
Recurrent expenditure inclusive of amortisation and sinking fund contributions has been estimated at EC$875.6 million, 3.6% or EC$30.8 million higher than 2019.
Current expenditure is estimated at EC$678 million, amortisation — EC$152.5 million and sinking fund contributions — $45 million.
Compared to 2019, current expenditure is expected to increase by 3.45%, amortisation by 11.1% and sinking funds contributions fall by 13.3%.
The finance minister said wages and salaries see an increase of EC$11.1 million or 3.6%, while other transfers increase by EC$700,000 or 0.6%.
Recurrent expenditure by economic categories sees compensation of employees accounting for EC$330.1 million; pensions, E$60,2 million; other transfers, EC$124 million, debt service EC$267.9 million; debt servicing, 267.9 million; and goods and service of EC$93.2 million — for a total of 875.6.
The government is estimating paying out EC$269.7 million in wages and salaries, allowances of EC$24.8 million, wages of EC$23.1 million, employees’ National Insurance Services (NIS) contribution of EC$12.5 million, and rewards and incentive of about EC$100,000 — for a total EC$330.2 million.
Gonsalves said the 2020 budget for wages and salaries is 3.6% higher than the approved amount for 2019, with this year’s 2% salary increase for government workers as the main contributor to the higher amount.
This year, the government’s allocation for the payment of pensions and government’s counterpart contribution to the NIS for civil servants is EC$72.6 million.
The amount is comprised of pension of EC$60.1 million and NIS contributions of EC$12.5 million.
The minister said retirement benefits continue to be the single fastest-growing item of recurrent expenditure.
He said, this year, the government plans to start public consultations on a variety of options that it is proposing.
Gonsalves thanked the unions and members of the labour movement for a “useful consultation” that they held with him and Minister of Labour Saboto Caesar a few days earlier.
“I thought that the meeting demonstrated by all members of the labour movement an understanding that the current pension arrangements are unsustainable and an understanding that lengthy public discourse is necessary for the public to be made aware of the various options for them to provide new options of their own and for us to have a robust and mature conversation about what is required going forward in the area of pension reform.”
As of December 31, 2019, the public debt stood at EC$1,670,664,447.
This was 0.8% more than the total disbursed outstanding debt for the comparative period of 2018.
The total domestic debt amounted to EC$494.7 million, 14.2% or EC$81.9 million less than in 2018.
The external debt was EC$1.176 billion, an increase of 8.8% or EC$95.6 million compared to 2018.
The debate continues.