By NEIL HARTNELL
Tribune Business Editor
The Ministry of Finance’s top official yesterday revealed collections in the current “revenue-rich” quarter were “promising”, with the government’s fiscal “game plan” firmly on target.
Marlon Johnson, the acting financial secretary, told Tribune Business that the revenue numbers for the first two months of the 2019 calendar year were “in line” with the government’s expectations.
The January-March period is typically when the government earns the bulk of its annual revenues, as it coincides with peak economic activity stemming from the winter tourism season, and is also the period when business licence fees, the bulk of real property taxes and commercial vehicle licences are paid.
It represents the third quarter of the government’s fiscal year, and Mr Johnson said: “What we are seeing is the third quarter numbers so far have been promising. It’s in line with our anticipation that revenue flows will be a little more robust in the third quarter.
“The numbers so far for almost two months of the year show some promising signs. I haven’t seen anything to lead me to believe the [full-year fiscal] targets won’t be met.”
Mr Johnson was speaking after KP Turnquest, deputy prime minister, unveiled a mid-year budget in the House of Assembly in which he forecast that the 2018-2019 fiscal deficit - measuring by how much government spending exceeds revenues - will come in better than initially forecast.
He predicted that it would finish the year around $230m, some $5-$10m better than the initially forecast $237.6m, as a result of “significant expenditure restraint” that will compensate - and offset - a projected 7 percent, or $185.43m, revenue shortfall compared to the May budget’s projections.
The Government is predicting that recurrent spending, which covers its fixed costs such as civil service salaries, benefits and rents, will be held 5 percent or $130m below initial forecasts, thus enabling it to produce the promised recurrent surplus.
“The game plan has been to manage the expenditure growth so that we maintain the overall fiscal targets,” Mr Johnson told Tribune Business. “That’s why the deputy prime minister is able to speak with some measure of confidence that we’re on track.
“Revenue is off for the reasons outlined, but expenditure is staying fairly well contained so that the Government can meet its deficit targets. We’re actively managing expenditure, planned expenditure and expenditure growth, and when there’s the opportunity to do so we will make sure we scrutinise expenditure - especially large expenditure items.”
Mr Johnson said he had seen no sign that the Government’s “stringent” spending regime had forced major cutbacks, or negatively impacted the delivery of public services, saying: “As in the case of Business Licences we’re trying to optimise how we do business so we do more with the same resources, but there’s been no cut back in any capital works plan.
“We’ve been able to keep people on budget. We’ve started regular budget meetings with agencies. The policy has been to manage expenditure controls, meet with agencies and ensure they stay in line with budget policies, and that’s helped quite a bit.”
Mr Johnson said the Revenue Enhancement Unit (REU), whose delayed creation could cost the Government up to $80m in projected revenues this fiscal year, was set to be “imminently” established in March.
He added that the Public Financial Management Bill was “still in its nascent stage”, and said: “It’s an extremely comprehensive Bill. It is intended to replace eventually the Financial Administration and Audit Act.
“It will really modernise and bring standards to public sector financial management in line with best international practices. That will take some time.” Mr Johnson said a second round of consultations among senior civil servants on the Bill was set to take place prior to its presentation to ministers, and then it will be released for wider public assessment.
The acting financial secretary said the Government’s plans to evaluate, then overhaul, oversight of state-owned enterprises (SOEs) that will receive nearly $400m in taxpayer subsidies this fiscal year will be a three-phase project that starts in March and lasts 18 months.
Emphasising that it was intended to put SOEs in a position to meet the Government’s demands for “cost recovery” and “value for money”, Mr Johnson said: “As the Government would have said, to remain within the parameters of any fiscal policy it’s important to have a clear understanding of how money is being spent.
“We want to optimise the tax dollars. It’s important to get government agencies to the point, not just SOEs, of providing information to show they’re efficiently meeting their mandate. This is value for money, measuring value and making use of technology in the delivery of public services.
“We want to get to a benchmark, and use empirical numbers, so we have a basis where we can compare them, set some performance indicators and measure them in an empirical way.”