THE Government stayed ahead of its primary balance projections for the second month in the fiscal year, which placed it on target to meet the $12.1 billion primary surplus target for the June quarter as promised under the stipulations of the quantitative performance criteria of the International Monetary Fund (IMF) stand-by agreement.

Government, however, fell short of revenue projections by $2.2 billion in May, reflecting a $900 million shortfall in collection of PAYE, $960 million lower-than-projected tax revenue collected from international trade and a $640 million shortfall on revenue collection on production and consumption.

GCT on imports for May was better than expected but lower-than-expected custom duty collections and SCT on imports dragged down tax revenue from international trade.

Tax revenues collected were higher than the comparative period in 2009 for most areas, but revenue streams aimed at taxing individual income and consumption failed to surpass year-earlier levels, reflecting generally poorer economic conditions.

In May, PAYE was down $800 million was down from May 2009, while SCT on locally consumed items, motor vehicle licence fees and betting, gaming and lottery revenues were all down from year-earlier levels.

The Government did manage to slash budget spending by $4 billion in May, through a $1.4 billion reduction in spending on programmes and a $410 million cut to capital expenditure. Lower-than-expected exchange rates also led to a $2.1-billion reduction in interest expense, as interest expense on external debt came in $1.8 billion lower than budgeted.