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.
These are all projections. These days of uncertainty will show that no one can accurately project economics. We are tied to the US Dollar and import dependent. We have no control over many things and cannot know what the US Government has planned for monetary policy or otherwise. We do know they have been releasing TRILLIONS into the economy; at a time where their economic output has declined. This means our US-pegged currency will have much lower buying power and high inflation is guaranteed . There are many things we need to take into account!
As usual I have to agree more with Friday when it comes to macro economics. He is correct to say these are unprecedented times FOR SVG, but, Consider that Jesus tells us “There is nothing NEW under the sun”. I may be a historian but maybe not good enough to look into history to see what past governments did in such times of crisis. What worked and what did not. We all know that the USA did the worst things possible during the depression that started in the 1930s and it is CLEARLY OBVIOUS that lock-downs are even far worse than no lock-downs. The virus seems to spread even more when people are locked-down…duh! Not to mention all the other problems it causes. Friday may be wrong concerning the virus and Gonsalves seems to be far better, but how can we the people (those of us that are well-informed and have working brains) encourage the two parties that unity is key to solving these problems?
Is there a way that we can “not let a “good” crisis go to waste” as most of the world goes to “hell in a handbasket”? Singapore is usually the most intelligent nation on earth for the past 15 years, what are they doing? Friday also says we have to be creative. ABSOLUTELY CORRECT! I would have to add that we have to get proper information about the virus instead of all the misinformation and fear that is destroying this country.
We also have to hope that Bill and Tony are not going to release an even worse virus as they have been hinting at!
These are just predictions that no one can predict with any accuracy. Friday is right that creativity needs to be applied in these times, Friday himself needs to get accurate information concerning the virus and only then listen to his own advice. No matter what philosophy is applied to our economic policy there will certainly be many that will initially get upset. Taxes will go up drastically within the next year. Creativity COULD cause it to stay at a minimum but since we lack creativity, that is not going to happen. At all costs we have to shield ourselves from the “”Great” Reset” as much as possible.