December fiscal performance disappointing – Byles
The Jamaican Government's fiscal performance in December was disappointing, with revenues and grants falling short by $3.4 billion and expenditure exceeding target by $2.5 billion, co-chairman of the Economic Programme Oversight Committee (EPOC), Richard Byles said.
Tax revenues for the fiscal year to December remained below target by $9.7 billion, attributable mainly to the underperformance of company taxes, which was $6.6 billion below budget, and general consumption tax on both local and imported goods, which was $6.7 billion below the programmed amount.
"EPOC asked and the Ministry of Finance agreed to request Tax Administration Jamaica ... to attend the next EPOC meeting and speak to us about their efforts at tax compliance and so we look forward to that in our March meeting," Byles said Thursday at his regular EPOC press briefing.
Government spending also went beyond budget, due in part to delayed payment under the health sector reclassification programme, which was made in December.
"This caused the overperformance of the primary balance to deteriorate from $6.2 billion in November to $0.6 billion in December," said the EPOC co-chair as he released the 21st communique of the non-private sector members of the oversight committee.
However, Byles pointed out that for the fiscal year to date expenditure was $15.2 billion below budget, with the recurrent contributing $6.9 billion and capital $8.3 billion, which, he said, more than compensated for the revenue shortfall and helped the Government to surpass the targeted primary surplus.
The primary surplus of $66.6 billion for April to December 2014 exceeded the target of $66 billion, while the net international reserves (NIR) stood at US$2.01 billion, US$754 billion more than the International Monetary Fund December target of US$1.26 billion.
At the end of January 2015, the NIR stood at US$1.78 billion, the Government having paid down debt as programmed. The Bank of Jamaica also sold foreign exchange to the market during the month as part of the effort to prop up the depreciating Jamaican dollar.
Byles said the Pay-As-You-Earn tax and tax on income exceeded the budget by $2 billion and $1.5 billion respectively, "and that trend we see from earlier in the year".
However, the drawdown on grants fell short in December by $1.8 billion, resulting in a shortfall of $3 billion for the period under review.
Notwithstanding the December performance, Byles said, the Ministry of Finance and Planning has advised EPOC that the January revenue collection was on target and that action has been taken to ensure the necessary paperwork be done to effect drawdown of the budgeted grant funds before the close of fiscal year 2014-15.
"The Ministry of Finance took us into their confidence and said that preliminary numbers that they are seeing for January indicate that the tax revenues have finally performed to budget, which is better than they have for the last nine months," said the EPOC co-chairman.
"With that little consolation in mind, whilst we are a little concerned about the December fiscal position, I think that, generally speaking, the economy looks like it is recovering and that it is growing stronger," he said.
He referred to Statistical Institute of Jamaica data which show that inflation for December was -0.3 per cent, bringing the rate for the calendar year to 6.4 per cent and the fiscal year to date to 4.6 per cent. Byles said "this lower inflation trend, combined with a much improved current-account deficit, should create conditions for a slowing of the rate of depreciation of the Jamaican dollar."
He emphasised that "inflation is very moderate, the trade deficit is closing up, employment is rising and tourism - a very important sector for us in Jamaica - is growing at a pretty good pace."
"So, generally speaking, I would say we are pleased with the performance of the economy and it is showing some recovery, after so many quarters of difficult struggle," he added.