Monday, April 22, 2024

Spending to go up

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Government is estimating that its spending will increase by more than $1 billion in the next financial year starting April 1.

This is outlined in the Estimates of Expenditure and Revenue for the financial year 20242025, which was laid in Parliament yesterday ahead of the start of debate on the Appropriation Bill, 2024, in the House of Assembly next Tuesday.

The increased expenditure includes an additional $237.3 million which the Ministry of Finance, Economic Affairs and Investment is projecting will have to be spent repaying debt, including interest, in the next financial year.

Other spending priorities detailed by the ministry include $131.1 million for the University of the West Indies (UWI), a $100.9 million subvention for the Queen Elizabeth Hospital (QEH), and $9.8 million for the island’s hosting of the International Cricket Council’s Men’s T20 World Cup 2024.

Government estimates that its total expenditure for the new financial year will be $4.66 billion on the accrual basis, and $4.59 billion on the cash basis.

Accounting records

Accrual accounting records revenue and expenditure when transactions occur, while cash accounting does not note them until the money is received or spent.

The projected total expenditure represents a $1.1 billion increase in overall spending on the cash method of accounting, which is 31.8 per cent higher than the revised figure of $3.48 billion for the 2023-2024 financial year ending March 31.

“Of the amount approved for the 20242025 financial year, $3.42 billion represents current expenditure and $1.24 billion represents capital expenditure and amortisation,” the Ministry of Finance stated.

Government debt repayments, including interest, are estimated to be $1.6 billion in 2024-2025, up from the revised projection of $1.37 billion for the current financial year.

The ministry said that when debt payments (amortisation), excluding interest, of $817.8 million are taken into account, Government is expected to have a $251.9 million fiscal deficit on the cash basis next financial year. This implies that interest payments alone will be $782.2 million in 2024-2025.

“Expenditure on goods and services is expected to increase by $62.8 million over the revised figure for 20232024 to $635.3 million. Current transfers are projected to decrease by $61.8 million or 5.5 per cent to $1.05 billion,” the ministry noted.

Regarding revenue, it said on the accrual basis it estimates this will be $3.72 million in the new financial year, and $3.54 billion on the cash basis, “an increase of $322.6 million or ten per cent over the revised revenue of $3.22 billion for the financial year ending March 31”.

It is projected that Government will have a primary balance, which is revenues minus all expenditures except debt payments, of $558.6 million in 20242025.

In addition to the financial support for UWI and the QEH, the Ministry of Finance said the Estimates have budgeted funding of $10.4 million for the Elderly Care Programme, $8.2 million for Invest Barbados, $15 million for the CAF Road Rehabilitation Programme, and $10.2 million for the Smart Energy Fund.

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