Budget cut no threat to COVID-19 relief spending says finance minister

Budget cut no threat to COVID-19 relief spending says finance minister

Senior staff reporter

Thursday, January 28, 2021

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Minister of Finance and the Public Service Dr Nigel Clarke says payments under another round of the Government's COVID-19 Allocation of Resources for Employees (CARE) Programme will continue this year.

“We have expenditure that will be in our January payment for the CARE Programme and related activities. So it is not that those activities have stopped,” Clarke said as he responded to questions from Opposition Leader Mark Golding during the debate on the Third Supplementary Estimates of Expenditure for the 2020/21 fiscal year in the House of Representatives on Tuesday.

“Payments are going out in January 2021. We will have payments in February. So it is not like these activities have stopped. What we are faced with here with the third supplementary estimates is that the revenues for the fiscal year ending March 31 are projected to be $8.6 billion below what was approved in the second supplementary estimates,” explained Clarke.

He said the threat is that the payments are being made in a context where the Government is looking to cut the potential rise in the debt-to-gross domestic product (GDP) ratio this year.

“So, our options, in light of a revenue decline of that magnitude, that occurs at the same time that we have increased expenditure demands from the Ministry of Health and Wellness and from the security services, means that it is going in the wrong direction,” said Clarke.

He added that the Government has been careful not to cut any activity that is related to social support or related programmes that are ongoing.

The finance minister pointed out that the majority of the areas that have seen cuts in expenditure plans for this fiscal year are those which will not be taking place. He pointed to the example of the local government elections, which was scheduled for this fiscal year. Parliament has voted to delay the election and Clarke noted that this would see a delayed spending of $940 million this year.

“We have navigated this crisis, we have absorbed it, we have been able to respond, but the path ahead is going to require a certain degree of focus. The path keeps us on a track of stability, but it is a very narrow one because of the debt dynamics,” declared Clarke.

Spelling out the estimates, which will be the final budgetary activity before the end of the fiscal year, Clarke said that the reduction of $3.5 billion or 0.3 per cent of the previous budget have continued in the non-debt expenditure, which reflects reductions in recurrent expenditure of $2 billion, with $1.5 billion cut from capital projects.

He said that there has been no adjustments in the public debt services or “below the line” payments.

But Clarke noted that the pandemic has severely curtailed the ability of some ministries, departments and agencies of government to programme activities including the recruitment of staff.

He said that the Government will be seeking secure a bond to cover the necessary payments.

But, the extent of the coverage would have to depend on on final negotiations with overseas sources and their parameters as well as when they can kick in.

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