PM announces $1.64 billion budget – and no new taxes

‘We are opening up the country, opening up the economy’ – said PM Gaston Browne (Photo by Johnny JnoBaptiste)
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By Shermain Bique-Charles

[email protected]

This year’s budget has laid to rest at least one of residents’ fears: there will be no new taxes in 2022.

Prime Minister Gaston Browne announced a whopping $1.64 billion budget yesterday, which represents an increase of nine per cent over the estimated $1.51 billion spent in 2021.

The eyes of the country will certainly be fixed on the individual allocations outlined by the prime minister, which he said are geared at stimulating the economy while propelling a resurgence in domestic output.  

Browne said the primary balance is the overall fiscal balance, less interest payments on public sector debt, and is an indication of the government’s ability to meets its obligations without incurring additional debt. 

“No economy that has experienced the constraints that ours has, consequent to the impact of the pandemic, can withstand further constraint if it is to grow and expand. 

“We are opening up the country, opening up the economy, and opening up the opportunity for all to advance and prosper,” he told parliamentarians during the last few minutes of his four-hour presentation.

Recurrent revenue is estimated at $975.6 million for 2022, which is a 23 percent increase over the $790.9 million generated in 2021. 

 The amount budgeted for capital receipts is $7 million, while grant funding this year is budgeted at $50.2 million.

 On the expenditure side, estimated recurrent expenditure, excluding principal payments, is $961.1 million. 

 A current account surplus of $14.5 million is therefore projected for 2022, the PM said.

The components of recurrent expenditure are:

•        Wages and salaries – $410.6 million

•        Goods and services – $167.6 million

•        Transfers and grants – $159 million

•        Interest payments – $110.1 million

•        Pensions and gratuities – $73.4 million

•        Statutory contributions – $40.4 million

The government’s capital budget for 2022 is $181.8 million. Browne said that more than doubles the almost $80 million spent on capital projects in 2021.

 Meanwhile, education is once again receiving the biggest chunk of the budget pie.

Ministry allocations:

  • Ministry of Education $154.8 million
  • Ministry of Health, Environment $114.1 million
  • Ministry of Legal Affairs $104.4 million
  • Ministry of Works $87.5 million
  • Ministry of Foreign Affairs $37.7 million
  • Ministry of Social Transformation $26.9 million
  • Ministry of Tourism $25.6 million
  • Ministry of Agriculture $17.5 million
  • Ministry of Information $16.4 million
  • Ministry of Creative Industries $10.4 million
  • Ministry of Civil Aviation $9.5 million
  • Ministry of Housing $5.7 million

The 2022 budget also includes allocations for other offices such as the Electoral Commission, legislature and the judiciary.

PM Browne went on to commend residents, who he said had contributed to the growth of the economy in 2021, despite the difficult economic circumstances and the reduction in revenues since the start of the pandemic.

And despite the tough times, PM Browne said his government’s “astute” management of difficult economic circumstances had resulted in all public servants remaining employed.

 “This was part of our caring strategy, by which we ensured that there should be at least one wage earner in each household, even while the private sector was forced to lay off employees. It was not an easy undertaking,” he said. 

Wages, salaries and pensions, he said, absorbed almost 60 percent of government revenues. But that, according to Browne, did not prevent public servants being paid.

While the government is under intense pressure to pay up outstanding overtime to several government arms, salaries and wages are up to date, he explained.

  Prime Minister Browne said even as his government ensured public servants had their full salaries and wages to care for themselves and their families, the administration still managed to increase spending to contain the coronavirus and provide additional funds to the Sir Lester Bird Medical Centre.

 “By any objective standard, Mr Speaker, turning around the economy by more than 25 percentage points from a contraction of 20.2 percent in 2020 to growth of 5.3 percent in 2021 is a phenomenal feat,” he said. 

PM Browne said that the government, in sync with the private sector, oversaw an increase in economic output of $270 million to bring GDP to approximately $4 billion in 2021 –  $500 million short of the 2019 figure of $4.5 billion.

 This, he claimed, proves that the country’s economy has bounced back after being battered by the pandemic.

 “The economy is growing at a rapid pace with tourism recovering and employment increasing… Undoubtedly, the Covid-19 pandemic battered our economy in 2020 and 2021, as it did every country in the world without exception. 

“But we bounced back, through solid leadership, to achieve 5.3 percent economic growth in 2021, as assessed by the Eastern Caribbean Central Bank. This is robust growth accomplished in a time of adversity,” Prime Minister Browne said.

 Singling out the Ministry of Tourism, Browne also hailed that department, calling it the catalyst for growth in 2021.

 The figures for 2021 show total stay-over visitor arrivals were 169,469, compared to 125,089 at the end of December 2020. Stay-over arrivals recorded for 2021 were 55 percent of stay-over arrivals in 2019 and played a significant role in producing the 49.2 percent expansion in output from the hotel sector in 2021 compared to the 69 percent decline in 2020.

 Prime Minister Browne said that growth of the tourism sector, as represented by hotels and restaurants in the GDP numbers, is expected to be 16 percent. This he said is a significant turnaround from the decline of 63.6 percent that the sector experienced in 2020.

 The country’s leader said that the performance of the tourism team was exceptional and they must be commended for the hard work put in to ensure the sector continues to be a major driver of the economy despite the challenges posed by Covid-19.

 The construction sector, according to the nation’s leader, also contributed to last year’s economic growth. 

He said that it is projected to improve by 12 percent in 2021 after a decline of 26 percent in 2020.

Meanwhile, the sector for transport, storage and communication is expected to grow by 5.7 percent for 2021, compared to a decline of 25.2 percent in 2020. 

Other sectors experiencing growth include: agriculture, livestock and forestry – 1.9 per cent; fishing – two percent; and wholesale and retail trade – 10 percent.

Other areas of economic expansion outlined by the government include investments in strategic projects geared at stimulating the economy which could secure growth of about eight percent this year, he said. They include the acquisition and renovation of the Jolly Beach Resort and the construction of a hotel at Morris Bay.

“We will ensure payment due to the workers upon successful acquisition of the property. But the workers ought to know the government doesn’t owe them a cent,” he said, referring to the hundreds of former Jolly Beach Resort staff still fighting for severance pay almost two years after the hotel closed.

“We are the ones fighting to pay the severance. Instead of protesting, they should be praying for the government to resolve this issue,” he added.

The prime minister rounded up his “no taxes and high investments” budget by admonishing residents that “those who are promising to remove taxes are the ones that laced us with taxes over their 10-year period between 2004 and 2014”.

The budget will be debated on February 10.

Who gets what?

Ministerial allocations for 2022

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