Left: Minister of Finance Audley Shaw. Right: Senator Don Wehby, minister without portfolio in the Ministry of Finance. - File photos

The Finance ministry has overshot its borrowing target by more than $20 billion within the first six months of the fiscal year, even as taxes continue to underperform in an economy showing signs of dampened consumerism while the cost of doing business expands.

Tax collections were close to $5 billion off target up to the end of September, forcing the Audley Shaw led team to slice spending on capital projects and some programmes, the most current fiscal numbers show.

General Consumption Tax was the biggest drag, falling short by about $3 billion.

Across the spectrum, tax collections amounted to $117 billion but were 3.8 per cent below budget as at September, but still 17 per cent ahead of collections within the same period last year when inflows to the treasury reached $99.8 billion.

Within the current period, total revenue flows, when grants, tax and non-tax collections, and other income are factored, also fell short at $131.4 billion - some $5.4 billion or four per cent off target.

To compensate, spending was cut by $8.5 billion or five per cent to $157 billion, a $3 billion over-extension that has produced a better outcome for the fiscal deficit than originally projected.

Now the deficit, which is the gap between income or revenues and Government's operational or spending bill, is a negative $25.7 billion, relative to the near $29 billion that was programmed.

The gap, though still wide, was more than covered by debt financing.

Together, taxes, other revenue, and new borrowings represented inflows of $219 billion, helped substantially by the finance minis-try's overshoot of new debt issues and loan receipts by 31 per cent.

Shaw and his fiscal chief Senator Don Wehby have, within the first six months of the fiscal year, borrowed a fresh $87.6 billion from domestic investors, foreign markets and donor agencies, though the target signed off on by Parliament was $67 billion.

More than half the new borrowings, $51.6 billion, have been used to pay down a portion of the debt — which the most recent data to August put at $1.036 trillion — leaving the treasury with $36 billion, sufficient to cover the deficit and leave a $10-billion cushion to cover future operations.

Tax collections broken down

April-September 2008

Income and profit taxes of $47.6 billion were up by less than one point in the review period, but 17 per cent ahead of the comparative period in 2007/08;

Production and consumption taxes of $34.5 billion, however, were 9.4 per cent off track, but up 12.4 performance year on year. Within this category, GCT, which reigns as the top revenue source, was the biggest drag - underperforming by almost 13 per cent, but still up 12 per cent year on year;

International trade taxes of $33.8 billion were off by 4.7 per cent, but up 21 per cent over the 2007/08 period.

Total taxes were $117 billion off target by 3.8 per cent, but up 17 per cent over last year.

Central government operations

April-September 2008

Revenue and grants $131 billion

Expenditure $157 billion

Recurrent $142 billion

Capital projects $15 billion

Fiscal deficit $26 billion

Primary surplus $33 billion

Loan receipts $88 billion