March 7, 2013
March 7, 2013
Reining in government debt through redressing recurrent expenditure and revenue imbalances, as well as committing to reducing the fiscal deficit with various structural fiscal reforms, will comprise of a medium-term consolidation plan, according to State Minister for Finance Michael Halkitis.
“Government policy actions and decisions through 2016/17 will be guided by the medium-term fiscal framework in the [mid-year budget] statement to ensure that we secure the attainment of the fundamental fiscal targets that we have established,” he said during the 2012/13 Mid-Year Budget debate being held in the House of Assembly this week.
“However, given the fiscal slippage to date in 2012/13, the statement also enumerated a number of initiatives to ensure that we meet our 2012/13 GFS deficit target of 6.5 per cent of gross domestic product.”
“At the time of the budget, we were projecting a GFS deficit of $550 million in 2012/13, or 6.5 per cent of GDP. With the revised, lower level of GDP this fiscal year, meeting the deficit target of 6.5 per cent implies a deficit of $532 million. Based on experience to the mid-year, recurrent revenues have been revised down this year by $120 million from $1.55 billion to $1.43 billion.”
On March 4, Halkitis told Parliament that the Ministry of Finance will, over the balance of the current fiscal year, exert enhanced monitoring and surveillance over the recurrent expenditures of government ministries and departments such as to secure a significant reduction in the aggregate level of those expenditures in 2012/13.
He said the Ministry is aiming to achieve a level of recurrent expenditures this year of $1.72 billion, down by some $101 million from the budget projection of $1.821 billion.
“We expect to moderate the pace of capital expenditures below the amounts budgeted. In total, we now project capital expenditures in 2012/13 at a level of $363 million, down from the budget estimate of $400 million. Taken together, these near-term fiscal actions through the end of the fiscal year are projected to keep us on course and secure our GFS target in 2012/13,” said Halkitis.
“The statement also included measures to enhance revenue performance in 2012/13 and beyond, including the improvement of the system for electronic submissions to customs. Interim measures were also announced to strengthen compliance within the real property tax system, in the form of an amnesty programme that is designed to encourage compliance and payment.”
Halkitis said that the statement announced a reduction on the excise tax on truck purchases from 85 per cent to 65 per cent prevailing from before the 2010/11 Budget.
He said it is designed to provide some measure of immediate relief to small business operators.