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A decade of missed fiscal targets
by Camilo Thame Business Observer writer
Wednesday, April 18, 2007
Finance Minister Dr Omar Davies managed to slash $27 billion, in nominal terms, from the capital project spending over the last 10 years in an effort to curtail Government expenditure against the backdrop of missed revenue targets.
But the reduction in discretionary spending did little to offset the $227 billion in deficit racked up over the decade ending March 31, a deficit which, in nominal terms, was $96 billion above the accumulated targets over the 10 years.
In the 2000-01 fiscal year Davies' ministry managed to achieve a deficit target - $3.1 billion - ostensibly through the $7.2 billion cut in capital spending, which at the time nullified a similar shortfall in revenue.
Typically, capital expenditure is the first cost to be targeted when revenue streams are not in line with projections, although at times only deferred to the following year. For example, $14 billion of the $39 billion scheduled for spending on capital projects during the fiscal year that runs to next March "represents expenditure which took place in the past and is now being brought in for transparency and accounting purposes", according to Davies in his budget presentation last week.
Throughout the period under review, actual spending on capital projects ran below budget, except in the 2004-05 fiscal year when $2.6 billion more than programmed was spent. This was, however, to accommodate reconstruction efforts after the impact of Hurricane Ivan, capital injection into Air Jamaica, which was handed back to the Government at the end of 2004, and spending on preparations for Cricket World Cup currently under way in the Caribbean.
Targets for revenues have been met or exceeded budget two out of the 10 years -- 1999-2000 and 2003-20004 - while expenditure levels surpassed targets in every year except for 1998-1999 and 2000-2001.
Combined revenues have fallen short of target over the 10 years by $65 billion, while the Government has overspent the budget by $46 billion.
While inconsistent, except for the recurrence of missed targets, general election years tend to have the highest overspending on expenditure budgets and carry the highest deficits.
Fiscal years 1997-98 and 2002-03 were years in which general elections were held - December 1997 and October 2002. During the first of the two, the Government exceded expenditure budget by $8.5 billion, an overexpenditure that, during the 10 years under review, was second only to that of 2002-03, when the overspending ran as high as $14 billion.
The deficits for those years were among the highest on record - roughly eight per cent of gross domestic product in both 1997/1998 and 2002/2003.
by Camilo Thame Business Observer writer
Wednesday, April 18, 2007
Finance Minister Dr Omar Davies managed to slash $27 billion, in nominal terms, from the capital project spending over the last 10 years in an effort to curtail Government expenditure against the backdrop of missed revenue targets.
But the reduction in discretionary spending did little to offset the $227 billion in deficit racked up over the decade ending March 31, a deficit which, in nominal terms, was $96 billion above the accumulated targets over the 10 years.
In the 2000-01 fiscal year Davies' ministry managed to achieve a deficit target - $3.1 billion - ostensibly through the $7.2 billion cut in capital spending, which at the time nullified a similar shortfall in revenue.
Typically, capital expenditure is the first cost to be targeted when revenue streams are not in line with projections, although at times only deferred to the following year. For example, $14 billion of the $39 billion scheduled for spending on capital projects during the fiscal year that runs to next March "represents expenditure which took place in the past and is now being brought in for transparency and accounting purposes", according to Davies in his budget presentation last week.
Throughout the period under review, actual spending on capital projects ran below budget, except in the 2004-05 fiscal year when $2.6 billion more than programmed was spent. This was, however, to accommodate reconstruction efforts after the impact of Hurricane Ivan, capital injection into Air Jamaica, which was handed back to the Government at the end of 2004, and spending on preparations for Cricket World Cup currently under way in the Caribbean.
Targets for revenues have been met or exceeded budget two out of the 10 years -- 1999-2000 and 2003-20004 - while expenditure levels surpassed targets in every year except for 1998-1999 and 2000-2001.
Combined revenues have fallen short of target over the 10 years by $65 billion, while the Government has overspent the budget by $46 billion.
While inconsistent, except for the recurrence of missed targets, general election years tend to have the highest overspending on expenditure budgets and carry the highest deficits.
Fiscal years 1997-98 and 2002-03 were years in which general elections were held - December 1997 and October 2002. During the first of the two, the Government exceded expenditure budget by $8.5 billion, an overexpenditure that, during the 10 years under review, was second only to that of 2002-03, when the overspending ran as high as $14 billion.
The deficits for those years were among the highest on record - roughly eight per cent of gross domestic product in both 1997/1998 and 2002/2003.
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