Freeze on all hiring in the public sector
In an obvious measure to cut state expenditure, Minister of Finance Chris Sinckler said during his presentation of the Budget in the House of Assembly that any deviation from this policy would “only be countenanced in cases of extreme criticalness” and would have to be approved by the Prime Minister and Minister of Civil Service before execution.
Sinckler said the new policy would also extend to the hiring of substitutes, temporary and/or casual workers as replacements for appointed staff proceeding on leave.
“Departments and boards who breach this policy will not receive any resources to cover the salaries of these persons if they cannot be accounted for in the system,” Sinckler indicated, while stating that there would also be an immediate freeze of all non-critical established posts which had not been filled in the last six months and were unlikely to be filled in the near term.
The finance minister also addressed the introduction of supplementaries to Parliament.
“There will be a strict policy of limiting supplementaries to within budgeted expenditure targets. Ministries and departments have been advised that the Ministry of Finance will not accept any requests for supplementaries where commensurate savings from their overall budget cannot be found, virement employed, or except in cases of serious national emergency. Special exemptions may be made on account of such areas or public health, national security, child and elderly care,” he said.
Sinckler noted that as reported in the Growth and Development Strategy 2013-2020, a broad objective was to reduce the fiscal deficit to below 2.0 per cent by 2020/21. However, given the need for an early, front loaded, adjustment, it was the aim of government over a 19-month period, to cut the deficit to a target that falls below 3.0 per cent of GDP by 2014/2015, and thereafter continue to keep the deficit on a sustainable path. He said the actions to do this would be carried out from both the expenditure and revenue side.
“While the fiscal adjustment programme will be done over a period of 19 months, most of the measures taken will continue to have some effect over the medium term (2013-2020).
“It should also be noted that some actions will be temporary, while others will extend beyond the 19 months’ time frame. The main intention is to rein in the deficit and gradually move it downwards towards more acceptable levels.
“On the revenue side the main goal is to institute revenue measures aimed at stabilising our declining revenues but done in a way that shares the burden among all members of the society so as to lessen its impact.
“Again, some of these impositions will be temporary, lasting only for the adjustment period of 19 months, while others will carry over until further notice or such time as fiscal balance is achieved. These measures are estimated to earn a total of $150.9 million over the 19 months.
“On the expenditure side, the measures aimed at reducing current expenditure by $285 million over the adjustment period target some of the expenditure areas most known to consume large amounts of government revenue, such as personal emoluments, subsidies and transfers, grants to individuals and organizations, specific areas of procurement and tax expenditures,” he explained.
He stressed that Government had been careful to design the expenditure adjustments in such a manner as to limit the potential for major job losses in the public service, through instructing line ministries and statutory entities to use retrenchment as a last resort, while preferring to institute creative programmes for work hours/days/week reductions among staff.
The finance minister added that the Ministry of the Civil Service and the Ministry of Finance would assume general oversight of the implementation of this aspect of the measures so as to ensure that the targets were achieved while adherence to the preferred approach outlined by government was maintained.
Sinckler noted that at the end of the period April 2012 to March 2013, the fiscal deficit to GDP ratio stood at an estimated 7.9 per cent, in contrast to 4.4 per cent for the same period 2011-2012. He noted this was on account of an 8.7 per cent decline in tax revenue due mainly to a fall in goods and services receipts by 6.9 per cent and taxes on income and profits by 11.1 percent.
“Gross public sector debt at the end of 2012 stood at 98.2 per cent of GDP and when netted out it stood at 56.0 per cent. With a growing fiscal deficit, which must be adjusted for stability purposes, the aim of the proposed measures is to cut the size of the deficit using a selected set of policies over a reasonable timeframe.
“In the Estimates of Revenue and Expenditure for financial year 2013-2014 approved by this Parliament we were forecasting a budget deficit of 5.6 per cent of GDP.
“Based on the preliminary returns for the first three months of the financial year, and taken together with potential financing requirements for the rest of the year based on history, we have estimated that the landing place for our fiscal deficit at the end of 2013/14 would be in excess of eight per cent of GDP.
“This could even be higher if revenues perform even more poorly and definitely would be if no intervention is made now. This would not be wise nor would it be sustainable,” he said. (WG)