Bad estimates lead to good outcome for deficit
Published:Friday | July 9, 2010 | 12:00 AM
The Finance Ministry has over-estimated the strength of Jamaican pay-packets, and fallen short on personal income tax collections by J$1.3 billion in the first two months of the fiscal year.
Overseas trade is also underperforming the Government's expectations, denying the treasury another J$858 million from duties and other cross-border taxes; as is manufacturing activity from which it gained J$500 less than expected from excise taxes.
It also got wrong the level of consumption activity within the domestic market, but this time it represented a plus of J$588 million above estimated GCT collections.
The miscalculations left Finance Minister Audley Shaw J$1.57 billion off target on taxes for April-May - the take for the period was J$37.63 billion - but he and his technocrats managed to shave J$5.33 billion off spending targets, inclusive of J$2.17 billion of savings on debt-servicing charges, to deliver a lower-than-expected deficit.
Spending outpaced revenue by J$10.4 billion, a narrower gap than the budgeted J$13.9 billion.
The government was also less active in the bond market than expected; borrowings of J$38 billion were J$5.6 billion below target.
The primary balance was a more robust J$3.27 billion in surplus at the close of May, a turnaround from April's J$4.3 billion primary deficit.