Financial Secretary Simon Wilson explained yesterday that the Public Finance Management (PFM) Act has kept the government from expeditiously utilizing extra revenue, requiring the government to ask Parliament for more money in borrowing than will likely be needed.
Wilson said the government expects to change parts of the PFM so that this situation does not reoccur.
According to Wilson, the inflexibility of the act ties the hands of the public treasury in certain situations, such as causing the government to submit two borrowing resolutions to Parliament.
“The supplementary budget is required because the Public Finance Management Act does not allow the government to put in place and use contingencies,” Wilson said.
“The $200 million extra in revenue means we have an extra $200 million available that we can use to make payments, but, unfortunately, we don’t have the authority.
“The only way we can make payments, according to the act, is a mechanism called reallocation. Reallocation means I can move money from one ministry to the next ministry to make a payment.
“The act limits reallocation to three percent, so roughly $60 million.
“So, what has happened is even though we have benefited from improved revenue flows, we’re constrained in how we can spend the money, hence the need for a supplementary budget.”
He said the government has to ask Parliament for the full borrowing amount of the supplementary budget, though 25 percent of the amount asked for was already paid through reallocation.
Wilson explained that the government has already paid out around $60 million.
“The total amount that has been requested is probably not going to be the total amount needed cause we’ve asked for $240 million for the supplementary.”
Wilson added that the country’s primary deficit will be zero this coming budget and about two percent in the next budget, given that the country’s “trajectory for our debt is moving in a positive way at a much faster rate than we anticipated because of the economic expansion.”