After missing initial targets, early inflow numbers for the month of February indicate that revenue collections are trending upward to meet budgetary expectations, according to a senior official in the Ministry of Finance.
The COVID-19 pandemic and associated lockdown policies had a significant impact on tax collection.
In its First Quarter Fiscal Snapshot and Report for FY 2020/21, the Ministry of Finance indicated that the 45 percent contraction in revenue was “higher than expected”.
There was mild improvement by the half-way point of the fiscal year, with revenue down 39 percent ($671.4 million) and tax revenue at $425 million.
Acting Financial Secretary Marlon Johnson said building on the momentum that started when the economy partially reopened in November, February is showing positive signs.
“Over the months of November, December and January, we saw that the revenue budgets we had for those months we were slightly over in all of those months. What that means is that we turned it back to where we thought it would be. That was important considering the impact that the COVID-19 shutdowns had on our first quarter. So, it meant that for our second quarter and going into our third quarter, we are seeing some improvements. The early numbers for February suggest that we, too, even in February, will be trending close to budget, if not meeting it,” he told Guardian Business yesterday.
“Now, of course, the budget is still a lot less than where we were in previous years, but it’s a positive sign given that again we are certainly back on target from a budgetary standpoint. So, that’s the cause of some optimism, which we temper of course with the realization that as we’ve seen elsewhere in the Caribbean, you could have a COVID-19 surge at anytime. So, we hope that we can collectively as a country avoid further restrictions due to COVID-19 so we can meet our revenue targets.”
Despite the slight improvement, the fiscal situation is still significantly down from where it was before the COVID-19 pandemic.
By this point last year, the government had collected more than $1.1 billion in revenue.
“What we are seeing is that we’re still down from last year because the economy is just where it is. But, again, it is trending back to where it was and it’s improving. So, the level has improved substantially,” Johnson said.
“The partial opening up of the domestic economy has allowed the government to get some revenue momentum and, of course, the trickling in of the tourists is assisting as well.”
Asked specifically what areas the government is seeing an improvement in regarding revenue collections, Johnson said, “It’s across the board. When your general economy improves, all of your revenue inflows improve. You import more, you spend more, more tourists come in, so you start to get more things like departure taxes and those sort of things.”
Prime Minister and Minister of Finance Dr. Hubert Minnis tabled the 2020/2021 mid-year budget in the House of Assembly last week, giving a brief overview of the current state of the country’s finances.
He did not announce any significant plans for the remainder of the fiscal year.
Debate on the mid-year budget is expected to begin today in the House of Assembly.
Looking ahead to the last months of this year, Johnson said the watchwords for the government will again be the uncertainty of COVID-19.
“What’s been really challenging at this particular period is that the trend with COVID-19 really determines what happens in our economy. The US surge has declined and there has been a pickup in forward bookings and people traveling,” he said.
“If that trend continues positively, people in our source market will have more confidence to travel and so, if the situation remains positive in the US in particular, then it means people will travel. However, at the same time, our numbers have to stay down because if we have a spike then that can erode confidence as well. It could mean we face the possibility of more restrictions.”