Prime Minister Perry Christie said the performance of Recurrent Revenues in 2012/13 was not as robust as had been expected at the time of the last Budget, because of weaker than projected growth of nominal gross domestic product (GDP).

“That weakness has persisted and we now expect Recurrent Revenues this year to come in at $1,380 million, down by 11 per cent or $170 million from the $1,550 million Budget projection,” the Prime Minister said as he presented the 2013/14 Budget Communication in the House of Assembly May 29, 2013.

He said on the basis of that weakness, the government implemented a number of near-term internal adjustments to ensure it meets the Budget GFS Deficit target of 6.5 per cent of GDP in 2012/13.

“Through those measures, we would have succeeded in containing Recurrent Expenditure in 2012/13 to an estimated level of $1,659 million, down by $162 million from last year’s Budget projection.”

Capital Expenditure should end up in the region of $350 million, down by $50 million from the Budget estimate, Christie added.

“With these adjustments, the GFS Deficit this fiscal year should approximate 6.1 per cent of GDP, slightly below the Budget forecast of 6.5 per cent.”

Prime Minister Christie said in the 2013/14 fiscal year, Recurrent Expenditure is being held to a level of $1,737 million, just below the level set out in the Mid-Year Statement.

“Likewise, Capital Expenditure next year will be contained to a level of $295 million, not significantly changed from the $300 million projected in February.”

He said in this context, the government expects investment in public infrastructure to be bolstered in the period ahead by public-private participation.

The Prime Minister added that the government will engage in roadwork projects across the Family Islands in the coming year including, in particular, Abaco, Andros and Acklins islands, as well as others.

He also noted that Recurrent Revenues in 2013/14 will be enhanced by the ongoing, projected modest growth of nominal GDP.

“They will also be bolstered by the various revenue adjustment and enhancement measures that I have announced in this communication.”

“On the basis of the measures that I have outlined, Recurrent Revenues in 2013/14 are now projected at $1,503 million, still leaving a gap from the forecast of $1,580 million that I set out in February.”

Prime Minister Christie said, as it stands, the GFS Deficit next year will reach $443 million or 5.1 per cent of GDP, as compared to the estimated outcome of 6.1 per cent of GDP this year.

The central components of the medium-term plan, in respect of Recurrent and Capital Expenditure and Recurrent Revenue, will continue to engage beyond 2013/14.

As I stated in the Mid-Year Budget Statement, we will continue to exert discipline on Recurrent and Capital Expenditure such that the levels of both continue to decline as a proportion of GDP.

He said: “As for Recurrent Revenue, the tax reform package that we announced in the February White Paper, as well as the ongoing structural enhancements to revenue administration that I reviewed earlier, will contribute to a significant improvement in the revenue yield of our tax system to a level more in line with norms in the region.”

The Prime Minister said as a consequence and barring unforeseen developments, the government expects to be able to adhere to the fiscal objectives of our medium-term plan, namely:

Both the Deficit on Recurrent Account and the GFS Deficit will be eradicated by 2015/16;

The Primary Deficit will be eliminated by 2014/15 and that is critical to reversing the upward trend in the debt to GDP ratio;

Government Debt will return to a level in the area of 50 per cent of GDP by 2016/17, as opposed to a level approaching 70 per cent in the absence of our decisive action plan to redress the public finances.