by Linda Straker
- International trade accounts for 48% of current revenue
- Government’s projected income has fallen by 50% due to closure of ports, hotels and St George’s University
- Budget projections adjustment not expected to affect social safety net programmes
Trade Minister, Oliver Joseph, disclosed that government has to adjust the 2020 budget projections because of the negative impact Covid-19 is having on the economy since the country went into lockdown in March after the first patient was confirmed.
“As a small island state with an open economy where international trade accounts for 48% of current revenue, the closure of ports, hotels and St George’s University has seriously reduced government’s ability to collect projected revenue,” Joseph said during the virtual post-cabinet briefing on Thursday, 6 August 2020.
As part of measures to contain and control the spread of Covid-19, government in March declared the State of Emergency which resulted in a curfew and lockdown of the country. “Because we had taken a decision to close our port and reduce business significantly, the government revenues are seriously undermined,” he said.
Joseph explained that when the Estimate of Revenue and Expenditure was prepared for 2020, government could not factor in the impact of Covid-19 because it was not around. The 2020 estimates were presented in November 2019. “Now it is here, we have to deal with it. Government continues to meet its obligation to workers and other sectors despite the shortfall in revenue.” Joseph assured that government has no plans to cut social programmes especially those that benefit the poor and vulnerable in society.
He disclosed that because government’s projected income has fallen by 50%, all changes under consideration will be done in accordance with rules set out in the Fiscal Responsibility legislation and the Public Finance Management Act. “The Fiscal Responsibility Act set certain targets and has a number of rules in place governing how government spends money. Because of the current situation, you will find instances where there is need for adjustments, and therefore we will have to look at the target that was set under the Fiscal Responsibility Act and what our response should be.”
“It will be done in line with the Fiscal Responsibility Act and the Public Finance Management Act. All our actions will be done in compliance with these two acts,” he said.
The Cabinet has already heard presentations by staff from the Ministry of Finance and they are going through the suggestions and recommendations with a view to arriving at a consensus for the required adjustments.
“Government’s full intention is to reactivate the economy through job creation, but as such there is a priority list with agriculture and education high on the agenda,” said Joseph.
The adjustment is not expected to affect social programmes for vulnerable and marginalised people who benefit from government social safety net programmes.
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