CATEGORY:POLITICS
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EDITOR'S NOTE: This article represents the views, policies and vision of the New National Party (NNP) headed by Prime Minister Dr. Keith Mitchell. The NNP has been in office since 1995 - for three consecutive terms. In the last general election, the NNP won 8 of the 15 seats that were contested.





Fiscal Projections 2006:
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The state of central government finances is likely to remain healthy in 2006. Notwithstanding this positive outlook, the growth in recurrent expenditures continues to outpace that of recurrent revenues and measured efforts are being made to reverse this trend.


Update on the Economic Reform Programme 2006 – 2008:
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The programme aimed at restoring the long-term economic base of the country started in earnest in April of this year. Implementation of the Programme is well underway with a number of initiatives having being completed while some are ongoing.

Following is a status report on some of the key fiscal measures under the Programme:

·National Reconstruction Levy (NRL) – This measure came into effect January 2006 and is expected to raise $10.5M. At the end of July, collection from the NRL amounted to EC$4.04M. In keeping with the provision of the NRL Act, the funds have been utilized in the areas of Housing, Agriculture, and Youth Development.

·Adopt an automatic fuel pricing mechanism – All the legal requirements for this measure except the effective date as determined by the Minister of Finance has been satisfied for this measure. The new pricing mechanism for fuel is expected to take effect from October 1st. 2006.

·Value Added Tax (VAT) – Work has started on the reintroduction of a VAT and Excise Tax System by the last quarter of 2007. A submission of the work of the VAT committees will be forwarded for the consideration of cabinet in the coming months.

·CDB project to strengthen Customs tax administration – The consultant for the project (Price Waterhouse Ltd.) has been selected and the project is expected to commence in September, 2006.

·Strengthening general tax administration – The IMF has provided assistance in this regard. An evaluation of our tax system (IRD and Customs) was conducted in June of 2006. Some of the recommendations are currently being implemented.

Notwithstanding these achievements, the Programme has not yet implemented a number of structural measures. These include training of staff in assessing projects in excess of EC$5.0M and amending the Income Tax Act. These measures are considered critical for the success of the Programme and every effort will be made to ensure their implementation.

Looking forward, the state of the central government finances is expected to improve gradually over the medium term. While new taxes are being proposed, decisive action by the Inland Revenue Department and Customs & Excise Division to improve tax administration and collections should yield additional revenues.

The state of central government finances is likely to improve in 2007 with the strong anticipated growth in the economy as well as from the fruits of ongoing fiscal reforms. It is forecasted that total current revenues will increase by 14.4 percent to $420.6M or 27.4 percent of GDP. This also represents an increase of an additional 1.3 percentage points of GDP. On the other hand, recurrent spending excluding principal payments is estimated to reach $328.0M, an increase of approximately 3.7 percent over the estimated outrun in 2006. Total principal repayments (domestic and external) are projected at $57.3M.

A current account surplus of $92.2M, or 6.0 percent of GDP is anticipated.

Apart from these, there is also a need to focus on regional studies that will help shape region’s economic performance in 2007. In this regard, Cricket World Cup 2007, Carnival 2007 etc. will play a critical role.

Other than Tourism and Culture, there is a need to focus on other sectors that will contribute income, employment and output in 2007. These include Agriculture and Manufacturing.