Jamaica's fiscal deficit for the four months to July 2006 was $5 billion lower than the comparative period last year, but is ahead of the programmed target by a similar amount due largely to the $4.6 billion in expenditure held back for the fiscal year.
Finance Minister, Dr Omar Davies, had targeted a 2.5 per cent deficit, or $21.4 billion, to be achieved from a 20 per cent increase in revenue and tightened fiscal spending.
All tax items have been running ahead of last year, excepting special consumption tax on local goods, which is 32.4 per cent behind last year; and tax on dividend, which is 6.4 per cent lower.
Alternately, only two tax measures have actually raked in the same amount or more than programmed for the four month period - stamp duty (3 per cent ahead of target) and tax on interest (47 per cent ahead).
Tax on interest was $6.6 billion, or $2 billion higher than programmed due to government's sluggishness in paying over withholding tax to entities which are exempt from the surcharge, such as pension funds.
It is expected that that figure will normalise and come in at budget by the end of the fiscal year next March, as government pays down the liability.
On the expenditure side government continues to rein in spending, which at $$77.2 billion was only eight per cent higher than the comparative period last year, and $4.6 billion lower than programmed.
Hike in interest cost
Lower interest cost for the four months, excepting in May when interest payments was 61 per cent higher than in May 2005, lead to an overall five per cent increase in interest cost.
Government's capital expenditure, which was 12 per cent higher than the comparative period last year, was $2.9 billion lower than programmed, while programmes cost the state the same as last year, and was $1 billion less than budget.
Wages and salaries which at $24.1 billion is the second costliest item on the Government's budget next to interest costs, was $962 million lower than budget.
Overall, wages cost the Govern-ment 16 per cent above last year, as a result of the various wage agreements made between Davies and public sector workers.
The negative fiscal balance was $12.4 billion compared to the $17.6 billion deficit for the comparative period last year and the $17.3 billion deficit programmed for the four months to July this year.
- Camilo Thame
