Minister of Finance, Camillo Gonsalves, on Wednesday, presented to lawmakers Estimates of Revenue and Expenditure of EC$1.21 million for 2021.
The approval of the figures late Wednesday night paved the way for the budget debate next week, when the finance minister will ask lawmakers to approve an EC$1,212,601,578 fiscal package.
This figure represents a 2.2% increase over the approved budget for 2020.
Gonsalves told Parliament that the 2021 budget is comprised of recurrent expenditure, inclusive of amortisation and sinking fund contributions, of EC$895,199,329 and capital expenditure of EC$317,402,250
It is financed by current revenue at EC$647,386,000 and capital receipts at EC$565,215,575.
The EC$67.7 million supplementary estimates of April 2020 have been reflected in the revised 2020 estimates column of the current fiscal package.
Current expenditure, exclusive of amortisation and sinking fund contributions, amounts to EC$698,125,511 and current revenue is estimated at EC$647,386,000.
“Consequently, and this is important for us to note and to discuss, there is a projected current account deficit of $50.7 million in these estimates,” Gonsalves told lawmakers.
He said that the projection is that in 2021, current revenue will amount to EC$647.4 million, which represents a 4.8% or EC$32.7 million decrease below the amount budgeted in 2020.
“Again, we are projecting lower current revenues for 2021. The deterioration in revenue performance in 2021 is reflective of the slowdown in real economic activity that we project for the year and the tax policy stance taken as a consequence of the pandemic.”
Revenue from tax sources is expected to contribute EC$554 million to the Consolidated Fund in 2021, while non-tax revenue is expected to gross EC$93.4 million, Gonsalves said.
“As such, tax revenue is expected to fall 5.4% as the major tax types are expected to contribute in the following ways: taxes on income and profit is expected to fall by $7 million or 4.3%; taxes on good and services expected to drop by 7.2 million or 3.7%; taxes on international trade and transactions, we project to fall by 7.8% or $13.7 million.”
The minister said that non-tax revenue collection for 2021 is estimated at EC$93.4 million, a 1% decrease relative to the amount budgeted in 2020.
The 2021 budget amount under this column is expected to come from the sale of goods and services, which is expected to generate EC$75 million in revenue.
The amount is estimated to be EC$1.2 million more than collected in 2020.
Revenue from non-tax sources is also expected to come from inflows from property income — about EC$9.7 million — and other revenue of EC$8.7 million.
“You will see … a conservative projection for revenue on the recurrent side in 2021 and, again, this is largely due to the tremendous uncertainty that we continue to face consequent on the COVID pandemic and the fact that we are starting 2021 in a weaker position, from a revenue standpoint, than we started 2020.”
He said that the COVID pandemic began to bite in SVG in the second quarter of 2020, after a fairly strong first quarter.
Gonsalves said that uncertainty over when SVG and its tourism source markets get the COVID-19 vaccine as well as the return of cruise ships and the rebound of tourism contribute to the revenue projections.
Meanwhile, the minister said that the total estimates of recurrent expenditure, inclusive of amortisation and sinking fund contributions is EC$895.2 million.
This is 2.2% or EC$19.6 million above the amount budgeted in 2020.
The recurrent expenditure for 2021 is made up of current expenditure of 698.1 million, amortisation of 175.1 million and sinking fund contributions of EC$22 million.
He said that current expenditure increases by 3%, largely due to the usual increments that members of the public service receive year-on-year and the added public service posts.
Amortisation is up by 14.8% but sinking fund contribution is projected to decrease by 51.1%
Wages and salaries are up by $14.8 million or 4.6% and other transfers which includes social assistance, training grants and contributions to local, regional and international organisations, is expected to increase by about EC$3.1 million or 2.5%.
Compensation of state employees will account for EC$345.9 million; pension will account for EC$60 million, other transfers for EC$127.4 million; debt servicing for EC$271.9 million and goods and services for EC$90 million.
He said that the figures were “a particularly difficult set of estimates to compile for a host of reasons”, including logistical challenges posed by the COVID-19 pandemic, which resulted in staff rotation in the public service.
“And, of course, more so than that, there are difficulties in projecting with the usual degree of certainty how the economy will perform in the coming year because of the tremendous uncertainties and complexities of looking through and beyond the pandemic and all of the vagaries that that implies and also with potential challenges closer to home like, most notably, the on-going effusive eruption of the la Soufriere volcano,” the finance minister said.
“When we discuss the budget later, we will see there are a wide range of projections from international agencies not only about how the world will emerge from COVID in 2021 but also how St. Vincent and the Grenadines will fare and so the process has been a challenging one,” Gonsalves said, and thanked the public servants involved in preparing the numbers.
“This was a difficult process and the projections were hard to come by and were interrogated vigorously throughout,” Gonsalves said.