Efforts to manage public finances during the past year have resulted in an improvement in central government’s fiscal performance.

Prime Minister and Minister for Finance, Hon. Dr. Kenny D. Anthony, gave an account of the government’s fiscal performance in 2015/2016 budget statement.

In his address, the Prime Minister revealed that the overall deficit was reduced by 35 percent in nominal terms or 2.1 percent as a percentage of GDP, and that a current account surplus was recorded for 2014/2015. Further, total revenue and grants increased by 5.2 percent and total expenditure of the central government fell by 2.4 percent.

"I am happy to report that we have made further strides towards achieving this objective," Dr. Anthony said. "There was a marked improvement in the fiscal operations of the central government in 2014/15, building on the improvement seen in 2013/14.

"The overall deficit narrowed to $138.8 million in 2014/15, compared to $213.5 million in 2013/14.  This is a reduction of 35 percent in nominal terms. As a ratio of GDP, this translates to an overall deficit of 3.7 percent, compared with 5.8 per cent in the previous year. In other words, we have secured a reduction of 2.1 percentage points. A current account surplus of $43.1 million was recorded compared with a current account deficit of $0.7 million in 2013/14.”

According to the Minister for Finance, this improvement reflects favorable revenue performance that is consistent with efforts by the government to broaden the tax base, improve administrative efficiency and contain and reduce most categories of non-wage expenditures.

 “All revenue sub-components expanded in 2014/15, contributing to total revenue and grants increasing by 5.2 percent to $970.4 million," Dr. Anthony said. "The bulk of the growth was led by higher collections of both VAT and taxes on income and profits. Receipts from VAT rose by 12.4 percent to $335.9 million and now accounts for more than a third of current revenue. This improvement in VAT collections reflects the change in the rate of VAT on hotels and related services from 8 percent to 10 percent, effective April 2014 and the narrowing of the VAT exempt list.

"Improved collections of taxes on income and profits reflect growth in corporate tax as signs are emerging of some improvements in that sector.”

The Prime Minister stated that the total expenditure of the central government fell by 2.4 percent to $1,109.2 million in 2014/15 and was driven by a 12.3 percent decline in capital expenditures to $235.4 million. The decline in capital expenditure, he said, was driven mainly by a slower than expected pace of construction work on the Saint Jude Hospital, due to later than anticipated disbursement of funds from a loan granted by the Republic of China (Taiwan).