Govt’s projected deficit becomes a surplus

Government is doing very well financially. The figures revealed by Minister in the Ministry of Finance Ken Valley yesterday indicated a gigantic swing from deficit to surplus in the first six months of this year. Speaking in the House of Representatives, Valley said the mid-year review suggested a good return for Government. While the budget projected a deficit in the first six months of $1.1 billion, a mid-year review showed that Government now had a fiscal surplus of over $1 billion, he said. “In other words the overall change is $2.1 billion,” he explained. He said this favourable position was due to a higher than anticipated revenue of $643.1 million. Revenues were up, while expenditure was down by $1.49 billion, he said.

Valley noted however that there was an outstanding commitment of $483 million, which meant that in real terms, the surplus thus far was $550 million. The Budget projected a fiscal deficit of $312.3 million by the end of the year. Valley said the additional revenue was due mainly to increases in corporate tax and taxes in individual earners which brought $361.8 million more. Valley said despite the fact that oil prices were $29 a barrel, $3 more than was budgeted for, Government collected less in oil taxes. Tax revenues from oil companies were $19 million less than what was anticipated, he said. He added that based on discussions with the oil companies, this trend would continue for the rest of 2004.

He said the companies were claiming that the shortfall was as a result of lower than anticipated production levels, dry holes and substantial increases in operating expenses. He said discussions were still to be held between the Inland Revenue and the companies to resolve this motion. Valley said that while the Budget was based on a production level of  29 million barrels of oil, it was estimated that production would be 26.5 million barrels for the year. As he piloted the motion asking the House to adopt the Second Report of the Finance Committee on proposals for the Supplementation and Variation of the 2004 Appropriation, Valley said Government will be spending $644,805,338 more than it budgeted for. It will also be varying expenditure by moving from one ministry to the next a total of $162,310,00.