GOVERNMENT revenue was running behind by $14.5 billion up to the end of December.

The proposed $8.1-billion cut in expenditure for this fiscal year, which was tabled in parliament yesterday, is hardly enough to close the gap.

What's more, if revenue continues to underperform (five per cent below the original target for the year that runs to March 31), the Government's primary surplus — what's left in its coffers after paying for non-debt expenses — will likely come in at just over $60 billion, or four per cent of GDP.

At the start of the fiscal year, the Government had set out to get a primary balance of six per cent.

Last month, Finance Minister Peter Phillips said that the Government would be targeting a surplus of 7.5 per cent.

It is not yet clear, how he plans to contain expenditure from growing, while he has already indicated that there will be new taxes, although without revealing the extent of revenue measures.

Most of the budget cuts tabled yesterday come from lower interest payments.

Incidentally, less-than-expected demand for Government paper and the exchange rate for the euro played a big role.

In its supplementary budget, the Government said that lower-than-projected amounts raised from the issue of JDX benchmark notes resulted in a $4.2 billion reduction in interest payments, while another $2 billion in savings was as a consequence of not returning to the international capital markets.

Before a ¤200 million bond was repaid in July, Phillips had failed to raise the funds to refinance the debt, and sought the money from local commercial banks.

Interestingly, at the time of repaying the euro bond, the exchange rate for the euro was lower than projected, which translated into another $3.2 billion savings.

Devaluation of the Jamaican dollar against the greenback, pushed up interest payments on other notes.