| Government revenue up, deficit doubled | | Print | |
| Written by Richard Green/richard@fptci.com | |||
| Thursday, 15 December 2011 14:36 | |||
 Despite a budget deficit that is twice what was predicted, the Turks and Caicos Islands interim government says it is “cautiously optimistic” about its finances halfway through the fiscal year. The bright spot in the six-month budget report released Dec. 13 was that government revenue was $20.2 million (34 percent) higher than the same period last year, mostly because of improving accommodations taxes on tourists and a whopping increase in stamp duty on land transactions. The latter is expected to earn $16 million in revenue this year, twice the amount forecasted. However, the biggest source of revenue — import duties — fell $2.2 million (9.5 percent) shy of projections. The good revenue news couldn’t overcome government spending of $95.6 million, which was $9.5 million (11.1 percent) over budget. That resulted in a $14.9 million deficit, $7.6 million higher than expected, but that’s less than half of the shortfall during the same period last year when it was $35.3 million. “The detailed results from the second quarter of this financial year reveal that there are real reasons for cautious optimism about the government’s financial position, despite some setbacks on unbudgeted historic liabilities, as we work towards the milestones of providing a stable economic environment and reaching a financial surplus next year,” said Hugh McGarel-Groves, the government’s chief financial officer. “Further, we can have improved confidence in our financial data due to our commitment to achieve reliable financial reporting. New measures have been put in place to track the monitoring of both revenue and expenditure programs through individual monthly meetings with ministries and departments, supported by improvements to the reporting system to ensure more accurate and timely financial information being available.” As the government explained last month, most of the extra spending was to settle old debts, mostly of the former government. More than $5 million has to be paid to the National Insurance Board for renting government office space in the N.J.S. Francis building on Grand Turk and the Hilly Ewing Building on Providenciales since 2006, when the elected government stopped paying. The interim government hasn’t been paying since it took over in August 2009. Another $6.4 million is owed to FortisTCI for electricity bills that date back to 2007, and $2.1 million for the next three years is due Herzog International for construction and road work for construction and road work between April 2007 and May 2009. Government travel costs of $1.8 million are due, mostly for airfare to Air Turks and Caicos. The government announced last month that it had to increase taxes yet again on customs transactions, fuel, alcohol and tobacco, plus new increases in work permit and residency fees, just to cover bad debts. “We all know that TCI has been through a tough time over the last few years, partly due to the global recession, partly to the problems caused by previous mismanagement,” said His Excellency the Gov. Ric Todd. “The people of the TCI are still paying the price. “This has caused real difficulties. Many individuals and families have found, and indeed are finding, things very hard at this time. The interim administration is working hard to try to remedy these problems, to further develop the economy and to improve public services.” “Despite these present difficulties and challenges, there are grounds for growing optimism in 2012. The latest detailed account of the (government) finances show that our reforms are, can and will have a positive effect.” Reaching a budget without deficit spending by 2013 is one of several requirements for the U.K. will return control of this overseas territory from the governor to elected officials. “Through the milestones, we have a clear way forward set out by ministers,” the governor said. “The good news is that elections can be held before the end of next year if these are met. But as Minister (Alan) Duncan said last week, this remains a challenge. … But it is definitely achievable.” Click here to see the 2011 Second Quarter Budget Report Click here to see the 2011 Second Quarter Budget Details
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