KINGSTOWN, St. Vincent, CMC – Finance Minister Camillo Gonsalves is asking Parliament to approve Estimates of Revenue and Expenditure for 2024 amounting to just over EC$16 billion (One EC dollar=US$0.37 cents) ahead of the budget presentation on January 8 next year.
The figure represents an 11.8 percent increase over the approved budget for 2023. It comprises recurrent expenditure, including amortization and sinking fund contributions, of EC$1,04 million and capital expenditure of EC$ 570.5 million.
The government says the fiscal package will be financed by current revenue of EC$810.8 million and capital receipts of EC$ 805.6 million.
Gonsalves said that “these estimates, as dry as those numbers are, encapsulate one of the most active, ambitious, and creative developmental programs ever seen in St. Vincent and the Grenadines.
“This year, in 2023, we spent more money than we’ve ever spent before on projects, and that number is going to be more than EC$350 million this year that we’re spending,” he said, adding that EC$570 million is budgeted for 2024.
“It’s ambitious. But we’ve taken a lot of time to try to get our ducks in a row to drive some significant developments in this country: schools, roads, hospitals, cultural and creative hubs, healthcare facilities, clinics and the like, sporting facilities, hospitality facilities, and not to mention the massive port facility that we believe will have a transformational impact on the country.”
The Finance Minister told legislators on Tuesday that many of the large projects will help to drive robust economic growth and are in addition to several important smaller projects “that will mean that we’ll have real impact and real differences on the lives of people across St. Vincent and the Grenadines in their local communities.”
Gonsalves said the 2024 current expenditure, exclusive of amortization and sinking fund contributions, amounts to EC$835.4 million, and current revenue is estimated at EC$810.8 million.
“Consequently, on the face of it, there is a current deficit of EC$24.6 million in these estimates,” he told Parliament but added that in the 2023 Estimates, there was a projection of a current deficit of about EC$10 million.
“And our latest projections for this year indicate that far from an EC$10 million deficit on the current account, we should realize a surplus over EC$36 million,” Gonsalves said, pointing out that the current revenue of EC$810.9 million is 6.5 percent or EC$49 million above the amount budgeted in 2023.
“This fairly strong projected revenue performance for 2024 is based on the projected expansion in real domestic activity of approximately six percent,” Gonsalves said, adding that revenue from tax sources is expected to contribute EC$691.5 million to the Consolidated Fund in 2024, while non-tax revenue is estimated to gross EC$119.3 million.
Tax revenue is expected to increase by 6.7 percent. Taxes on goods and services are expected to rise by EC$30.7 million or 14.5 percent, taxes on international trade and transactions are projected to increase by EC$13.1 million or 6.1 percent, and taxes on property are expected to go up by 2.6 percent or EC$1.4 million.
Non-tax revenue collection for 2024 is estimated at EC$119.3 million, 5.4 percent more than budgeted in 2023.
“The amount in the 2024 budget on the non-tax revenue is expected to come mainly from sales of goods and services, which is projected to generate EC$98.8 million in revenue,” Gonsalves said, noting that the amount is estimated to be EC$3 million more than the amount budgeted in 2023.
Revenue from non-tax sources is also expected to come from inflows and other miscellaneous sources amounting to EC$13.6 million.
Meanwhile, the total recurrent expenditure, including amortization and sinking fund contributions, is estimated at EC$1.04 billion, 7.4 percent or EC$71.7 million above the amount budgeted last year.
The recurrent expenditure for 2024 comprises a current spending of EC$835.4 million, amortization of EC$188.6 million, and sinking fund contributions of EC$22 million for a total of EC$1.045 billion.
The Finance Minister told Parliament that expenditures are expected to increase by 8.3 percent, amortization will fall by 4.4 percent, and sinking fund contributions will remain flat.
Under current expenditure, the compensation of employees will increase by 4% or EC$15 million, and other transfers, which include social assistance, training grants, and contributions to local, regional, and international organizations, will go up by about nine million dollars or 6.1 percent.
Gonsalves said compensation of employees will amount to EC$388.8 million, pensions EC$70 million, other transfers EC$156.6 million; debt service EC$317.7 million; and goods and services EC$112.8 million for a total of EC$1.045 billion.
He said that in the 2024 budget, compensation of employees, which adds up to EC$388.8 million, is comprised of salaries of EC$315.5 million, allowances of EC$28.8 million, wages of EC$29.4 million and employers National Insurance Services (NIS) contribution of EC$15.1 million.
The 2024 budget for wages and salaries is 4.2 percent higher than the amount estimated in the wage bill in 2023.
The government said the main reason for the increase in the wage bill is the two percent salary increase for public servants that the government agreed with public sector unions last year.
The Finance Minister said lifting the personal income tax ceiling to EC$3,000 a month, as Prime Minister Dr. Ralph Gonsalves announced in his Independence Address on October 27, will impact government revenue.
The third reason relates to the increases in increments and the additional allowances that go with a number of the new positions that have been created.
The Finance Minister said the 2024 budget provides EC$85.1 million to pay pensions to retired civil servants and the government’s counterpart contribution to the National Insurance.
Of that amount, EC$70 million is for pensions and EC$15.1 million for NIS contributions.
“Pensions will continue to be one of the more significant items in the recurrent expenditure, and the government has committed to announcing in the January budget speech the contours of the proposed amendments to our NIS and pension arrangements,” Gonaives said.
He said that while the government is “still consulting up to the last minute, we will make some additional announcements in that regard in the coming weeks.”
He said that transfer payments to local, regional, and international organizations and individuals, estimated at EC$156.6 million, represent an increase of 6.1 percent when compared to the budget of 2023.
This comprises grants and contributions of EC$108.5 million, training of EC$24.2 million, and social assistance of EC$23.9 million.
The budget for the expenditure on goods and services in 2024 is EC$112.8 million, a 2.9% increase in this category.
Government operating expenses will increase by 11.9 percent, reflecting rising operational costs of most ministries and departments due to inflationary pressures, mainly fuel energy and other material costs.
“And utilities an increase of about 1.7 percent again related to the high costs of utilities in the current environment. Other notable expenditure items under this category include maintenance and professional and consultancy expenses,” Gonsalves said.
He said that the public debt, as of September 30, was EC$2,444,470,403, a 12.8 percent year on year.
He said the recurrent budget is concentrated in four main functional areas, which account for 80 percent of the recurrent estimates.
General public services total EC$414 million or 42 percent; education accounts for 16.6 percent or EC$173.4 million; economic affairs get EC$116.4 million or 11.1 percent. And social protection is allocated 10.2 percent or EC$107 million.
“Other important strategic priorities of the government are health and public order and safety, where 9.2% and 8.2% of the budget have been allocated respectfully,” Gonsalves said.
The 2024 capital estimates of EC$570.5 million represent a 21% or EC$99 million yearly increase.
Opposition Leader Dr. Godwin Friday is expected to respond to the fiscal package on Tuesday.
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