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Govt to hold back expenditure in some key areas

Minister of Finance Peter Turnquest yesterday announced a number of measures to reduce government expenditure given the projected decrease in revenue as a result of the COVID-19 pandemic.

Turnquest said priority was given to spending related to COVID-19 and Hurricane Dorian recovery, as well as initiatives to create and retain jobs.

“To help offset the revenue loss associated with the economic fallout and our tax relief measures, [we] have, where possible and prudent, effected a reduction in discretionary spending across most government agencies,” he said in his 2020/2021 budget communication to the House of Assembly.

“In this vein, ministries were asked to prioritize spending related to the COVID-19 response and Hurricane Dorian recovery and to defer non-essential projects, which do not directly impact employment for future consideration.

“All agencies were also asked to prioritize programs that would retain jobs and boost new job creation to the greatest extent possible. Hence, our push to expedite a number of capital projects that can be easily rolled out to support this objective. This push to support national employment will help to support economic activity over the near-term, which is critical as the economy emerges slowly from the shutdown.”

The government estimates only $1.7 billion in revenue in the next fiscal year, $900 million less than the total revenue for the 2018/2019 budget year.

Turnquest said the government is liaising with unions to get their support to pause increments to permanent and pensionable civil servants, temporarily suspend salary increases and defer salary increases attendant to promotion exercises.

“To be clear, the intent will still be to process and grant promotions, as we recognize that some are long overdue,” Turnquest said.

“However, the attendant salary increases would be deferred at least until January 2021, when we have a better view of the circumstance. Similarly, any new appointments will happen on an exceptional basis only.

“We will also be reviewing all consultancies to determine which can be deferred or canceled.

“Retirees will be allowed to naturally complete their engagements and will not be renewed over the next year. However, these measures will be monitored, and may be adjusted as the economic and fiscal situation develops, including the payment of back pay related to promotions and increments.”

Turnquest said the current economic state has highlighted the need for the reform of state-owned enterprises (SOEs).

“For FY2019/2020, SOE subventions represented nearly 16 percent of recurrent expenditure,” he said.

“Notwithstanding additional outlays due to the impact of Hurricane Dorian, this level is simply unsustainable.

“Thus, we have asked all SOEs to implement a mix of cost savings and revenue enhancement measures this budget year. As a result, we are budgeting to receive some 10 percent, or roughly $21 million in savings, from a decrease in subventions to these entities.”

Turnquest said the government is working towards SOEs becoming self-sufficient to reduce strain on the budget. He said this may only be possible through increases in fees for consumers or the introduction of new fees to increase revenue for the enterprises.

“Over the medium term, it is the intent of the government to further rationalize these entities,” he said.

“The main objective is to push SOEs to become self-sufficient, thereby alleviating the need for the central government to subsidize their operations on an annual basis. To this end, we have targeted a $100 million annual reduction in subventions over the next four years, as these entities move to optimize efficiency and cost recovery strategies.

“These cost recovery strategies may include the introduction of user fees in some cases, or an increase in existing fees for other SOEs as a way to enhance revenue. Similarly, some SOEs may opt to adopt cost reductions such as merging, reducing operating costs, or revamping services with a view to eliminating non-efficient services.”

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Rachel Knowles

Rachel joined The Nassau Guardian in January 2019. Rachel covers national issues. Education: University of Virginia in Charlottesville, BA in Foreign Affairs and Spanish

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