Higher-than-projected oil prices and less spending in 2012 brought the fiscal deficit for that financial year down from a projected $6.675 billion to $3.113 billion, Finance Minister Larry Howai told the House of Representatives yesterday.
Howai said with the fiscal operations of 2012 substantially finalised, the deficit projections presented in the 2013 budget had changed. He was piloting a motion asking the House to accept the report of the Finance Committee. The Committee said the deficit for 2012 had moved from 4.3 per cent of GDP to 2.0 per cent of GDP.
Howai said the new deficit figure of $3.1 billion ($3.6 billion less than the final revised projections), was the result of the higher-than-projected revenue of $1.2 billion which was complemented by a lower than projected expenditure $2.3 billion.
Howai said higher revenue was due to higher receipts on taxes on income and profits ($2.1 billion), other taxes (26 million) and Unemployment Levy (221.7 million).
These were partially offset by lower revenues on taxes on good and services ($189.8 million), taxes on international trade (23.3 million) and non-tax revenue (895.7 million).
He said in the category of higher receipts on taxes on income and profits, receipts from oil companies were $1.7 billion higher than anticipated because higher than projected oil and gas prices.
The Finance Minister said the Committee approved a supplemental appropriation of $1.5 billion for the year 2012 "to fund urgent and critical expenditure to September 30, 2012".
He stressed that this did not further exacberate the fiscal deficit of 2012. He said the Appropriation for fiscal 2012 had also been varied in the sum of $2.945. Losses of $128,000 were also written off.
He said the Finance Committee also noted the transfer of funds between sub-heads in the $698.7 million for 2012.
Howai said the total increase in the heads of expenditure being proposed was $3.422 billion. He said the total decreases amounted to $1.874 billion. This represented a net increase of $1.56 billion "which was currently being sought" by way of the Finance Supplementation and Variation of Appropriation Financial Year 2012 bill.
Howai said the three heads of expenditure for which supplementary appropriation was being proposed were the Ministry of National Security ($22.8 million); Ministry of Housing ($544.3 million) and Ministry of Works ($1 billion).
He said the increase for National Security was to cover loan disbursements associated with the acquisition of four AW medium twin turbine helicopters.
The increase in the allocation for the Ministry of Housing was needed to retire advances made from Treasury deposits which were used by UDeCOTT to pay monies owed to Scotiabank for a bridging loan facility of $724 million for the construction of the Chancery Lane Administrative Complex.
The $1 billion increase for Works was to retire advances made from Treasury deposits to honour financial obligations associated with the extension of the Solomon Hochoy Highway.
The minister said it was necessary to have a variation in the appropriation for the 2012 financial year in the sum of $2.9 billion to realign the provisions in the fiscal accounts in accordance with the new assignment of responsibilities to ministers and the creation of new ministries (following the Cabinet reshuffle last year).
Howai said when the 2012 Budget was presented oil revenue was based on a projected oil price of US$75 and gas price of $2.75 per mbf and total revenues were projected at $46.9 billion, expenditure at $54.6 with an anticipated deficit of $7.6 billion.
In October 2013, the revised position in the budget documents was a revenue figure of $47.7 billion, expenditure of $54.4 billion and a deficit of $6.7 billion.