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Central
Government Budget Performance (Fiscal Year 1999/00) Overview Fiscal Developments Budget Outturn Revenue, Grants and Loan Receipts Expenditure and Payments In an effort to facilitate growth, the Government set as one of its major objectives, a reduction in the fiscal deficit to 4.6% of GDP for FY 1999/2000 from the 7.5% of GDP recorded the previous fiscal year. This was to be achieved through the implementation of new tax measures, constraints on expenditure and continued implementation of the debt strategy. In order to achieve the targeted deficit, alternative sources were identified as tax revenue fell short of projections. In addition, adjustments were made to capital expenditure in order to accommodate the increased interest payments resulting from the slower than projected reduction in interest rates and the delay in accessing the funds in the international capital markets. Although faced with these challenges, provisional data indicate that Government achieved a fiscal deficit of $12.6 billion or 4.5% of GDP.
FISCAL DEVELOPMENTS Tax Measures and User Fees Tax measures implemented during 1999/2000 were:
During the year, user fees for services provided by the Customs Department were also adjusted in line with the policy of increased cost recovery. This involved both the implementation of new user fees and increases on some of the existing fees. The new user fee structure is complementary to the computerization of the Customs Department which is expected to result in improved efficiency and increased collections by the Department. BUDGET OUTTURN The fiscal deficit of $12.6 billion or 4.5% of GDP, for FY 1999/2000, was a 34.2% improvement relative to the previous fiscal year. This is in line with the medium term programme for attaining a sustainable fiscal surplus. Total revenue and grants amounted to $90.5 billion, 2.8% above Budget and 22.2% above FY 1998/99. Expenditure totalled $103.2 billion, 4.1% higher than Budget and 10.6% over the level recorded for FY 1998/99
REVENUE, GRANTS AND LOAN RECEIPTS Tax Revenue Tax revenue for FY 1999/2000 totalled $76.0 billion. Although receipts were 3.8% below Budget they were 13.5% higher than that for FY 1998/99. This reflected the impact of the new tax measures and increased tax compliance. Income and Profit Taxes Income and profit taxes at $29.5 billion were $0.9 billion or 3% below the Budget but 14% above collections in FY 1998/99. The main contributor to this shortfall was PAYE which fell short of projections by $1.7 billion. This was due to a contraction in the PAYE base consequent on retrenchment in the formal sector. Taxes from the Bauxite/Alumina sector were also short of projections due to a reduction in the companies’ tax liabilities as a result of losses incurred in previous fiscal years. Additionally, reduction in production and export of bauxite, consequent on the Gramercy explosion as well as the decline in prices early in the fiscal year contributed to the fall-off in tax receipts. Tax on interest was $3 billion higher the previous fiscal year and is attributable to the 15% withholding tax at source which became effective on June 1, 1999. Production and Consumption Taxes Production and Consumption Tax receipts of $23.1 billion were $2.6 billion or 10.3% lower than Budget. Among the contributors to this shortfall were SCT (local), motor vehicle licences, Education Tax, GCT (local), and Betting, Gaming and Lotteries. The $2.1 billion shortfall in SCT (local) is attributable to a decline in the refining of crude oil by Petrojam as importation of refined oil increased. This situation is associated with the explosion at the Petrojam refinery in 1998/99. Production and Consumption Tax receipts were 10.2% higher than the previous year. International Trade Taxes from international trade at $23.5 billion were 2.2% higher than projected due to increased collections from SCT (imports) which were $2.9 billion higher than Budget. The SCT (imports) performance reflected the increased importation of refined oil. Taxes from international trade were 16.5% higher than in FY 1998/99. Non-Tax Revenue Non-tax revenue of $5.4 billion exceeded Budget by 22% and 75.5% higher than inflows for FY 1998/99. This above programmed performance was largely due to the receipt of US$22.5 million from the sale of cellular licences. Bauxite Levy Bauxite Levy inflows to the Capital Development Fund (CDF) for the fiscal year were $2.6 billion of which $1.9 billion was transferred to the Consolidated Fund. Capital RevenueInflows of capital revenue at $5.8 billion were $4.7 billion higher than Budget and $5.2 billion above receipts for the previous fiscal year. Among the factors contributing to this performance were receipts of US$100 million from the forward sale of bauxite and dividend payments associated with financing the special employment programme announced at the start of the fiscal year. Grants Grants at $0.7 million were 41.2% below Budget reflecting to some extent cuts in capital expenditure. The cuts were made largely to offset increases in interest payments and thereby facilitate achievement of the targeted fiscal deficit. Loan Receipts Loan receipts of $72.1 billion were $3.8 billion higher than programmed. Domestic loan receipts exceeded Budget by $11.5 billion mainly due to a $7.7 billion shortfall on the external side. The shortfall on the external side arose from the decision early in the fiscal year to delay accessing the international capital markets until the unfavourable international market conditions improved. In February 2000, the Government successfully raised Euro 200 million in the European markets. EXPENDITURE AND PAYMENTS Expenditure of $103.2 billion exceeded Budget by $4.1 billion. The main contributor to this above programmed expenditure was domestic interest payments which exceeded Budget by $5.0 billion. This was, partially offset by a reduction in capital expenditure. Recurrent programmes, wages and salaries and external interest payments also contributed to the above programme expenditure although to a lesser degree than domestic interest payments. Recurrent Expenditure Recurrent expenditure during FY 1999/2000 was $93.8 billion, $6.5 billion more than programmed. Of the $6.5 billion, $5.0 billion represented additional domestic interest payments. Non-Interest Expenditure Non-interest recurrent expenditure increased by $0.9 billion resulting from the higher than programmed inflation rate - in particular the higher than anticipated increase in petroleum prices. In addition, wages and salaries payments of $31.9 billion exceeded Budget by 0.4%. The outturn reflected payments of new rates, some of which were above the planned 6% and 4% for the 1998/2000 contract period. Interest Payments Interest payments of $42.1 billion were $5.6 billion higher than Budget due mainly to domestic interest payments which exceeded Budget by $5.0 billion. The additional domestic interest payments resulted from the slower than anticipated rate of decline in interest rates as well as the higher than programmed domestic loan receipts during the year. Contributing to the $0.5 billion excess on the external side was the depreciation of the Jamaican dollar over the year. Capital Expenditure Capital expenditure of $8.8 billion was $3.1 billion less than Budget. The adjustment compensated for the additional interest payments on domestic debt. Included in capital expenditure are $0.7 billion repayments with respect to the IMF. Revaluation of the Special Drawing Rights against the Jamaican dollar resulted in payments to the IMF exceeding Budget by 14.4%. Amortization Amortization amounted to $55.1 billion during FY 1999/2000, $7.4 billion below Budget. This was mainly due to lower than programmed domestic amortization which was $8.6 billion below Budget, reflecting rescheduling of domestic debt and below programmed amortization of FINSAC Notes. The depreciation of the Jamaican dollar contributed to higher than programmed external amortization. || Previous | Table of Contents | Next ||
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