PAAC to review budget cuts today
THE Public Administration and Appropriations Committee (PAAC) will meet this morning at Gordon House to start its review of the first supplementary estimates for 2013/14, which were tabled in the House of Representatives on Tuesday.
The Government trimmed the 2013/14 budget by just over $20 billion in the estimates to fill a huge tax revenue gap and maintain efforts to meet fiscal targets set under the Extended Fund Facility (EFF) agreement with the International Monetary Fund (IMF).
With a gap of over $11 million in tax revenue projections, the Government cut $12 billion from its recurrent or housekeeping expenses in order to keep on track with its target of a primary surplus of 7.5 per cent over the medium-term.
Fortunately, however, this was facilitated by a $10-billion saving on interest payments under the National Debt Exchange, which has offered the Government some breathing space, albeit much less than the $17-billion saving which had been predicted.
The Opposition and financial analysts had predicted that with the $11-billion tax hole in the budget, it was likely that the Government would have slashed mainly capital expenditure (A and B) and restore those expenditure in the 2014/15 budget. But, while the Government ended up slashing its Capital A budget by approximately $3 billion, and the Capital B budget — which is mainly financed by bilateral and multilateral support — by about $5 billion, the main cut affected its recurrent or housekeeping budget that has been slashed by a whopping $12.2 billion.
The cumulative result was a reduction in the overall budget for 2013/14 from $520.8 billion to $500.7 billion.
The summary of the budget figures published in the new estimates showed that capital expenditure has been reduced from $150.4 billion to $142.4 billion, and the recurrent budget from $370.4 billion to $358.2 billion.
Despite Government's attempt to protect some critical areas of the capital budget, there were cuts in allocations to the Ministry of Education, the Ministry of Agriculture and Fisheries, the Ministry of Science, Technology, Energy and Mining and the Ministry of Transport and Works.
There were some setbacks in recurrent expenditure for crucial social agencies like the Office of the Public Defender, the Children's Advocate and the Independent Commission of Investigation.
Additional information on the estimates should become available today when the PAAC, following the fiscal responsibility process introduced under the previous government, reviews the estimates with Financial Secretary Devon Rowe and his team from the Ministry of Finance and Planning in attendance.