Prime Minister Perry Christie Wednesday presented a US$3.3 billion budget to Parliament outlining a number of measures to further rationalize tariff and excise rates, encourage energy efficiency and provide relief to consumers.
In his first fiscal package since his Progressive Liberal party (PLP) won the general elections last month, Prime Minister Christie said the measures were aimed at dealing with the “very serious deterioration” in the government’s fiscal position.
“We must set the fiscal parameters prudently in 2012/13 in such a way as to begin the process of getting our fiscal house in order, while at the same time accommodating our short-term priority initiatives to the fullest extent possible,” Christie said.
He told lawmakers that the fundamental challenge for fiscal policy is the “very large negative imbalance that has been allowed to develop in respect of the Government’s recurrent account.
“The gap between Recurrent Expenditure and Recurrent Revenue, both expressed as a per cent of GDP (Gross Domestic Product), has quadrupled in the last five years. In 2006/07, the negative spread between the two stood at 0.8 per cent of GDP.
“This year, that imbalance has grown to 3.2 per cent of GDP. In the last five years, the ratio of Recurrent Expenditure to GDP has grown from 17.4 per cent to 21.3 per cent. However, the ratio of Recurrent
Revenue to GDP has only risen from 16.6 per cent to 18.1 per cent,” he said, adding that the former Hubert Ingraham administration “rather than only borrowing to finance productive investments in our nation’s future prosperity …was also increasingly borrowing to pay for an increase in everyday expenditures in the form of salaries, rent and utilities that was not matched by an increase in revenues.
The government has estimated recurrent expenditure at US$1.8 billion, while recurrent revenue is put at US$1.5 billion.
CMC
