Govt needs near-$100m surplus in fourth quarter to hit target

By Fay Simmons

Tribune Business Reporter

jsimmons@tribunemedia.net


The Fiscal Responsibility Council (FRC), unveiling its Annual Budget report said the Davis administration must produce a $96.6m surplus during the fourth quarter in order to meet its targeted fiscal deficit of $69.8m.

“Based on the revenue total for the first nine months of FY 2024/2025, revenue collections for the fourth quarter must reach $1,073m to meet the budgeted projection. The FRC is of the view that downside risk, including the reduction in the VAT rate on food during the final quarter of FY 2024/2025 pose a challenge to achievement of the targeted total,” said the Fiscal Responsibility Council’s report.

“While the FRC notes that the government’s recurrent and capital expenditures through the first nine months of FY 2024/2025 are generally in line with the budget, the fourth quarter performance will need to produce a fiscal surplus of $96.6 m to achieve the targeted fiscal deficit of $69.8m. Downside risks associated with possible underperformance in some revenue categories threaten this projected outturn.”

The FRC said although both the fiscal and primary balances for the first nine months were “improved” when compared to the 2023/2024 fiscal year a “robust” fourth quarter performance is needed to ensure budget projections are met.

“Notwithstanding the relative improvement of the first three-quarters compared to FY 2023/2024, the FY2024/2025 budget projects a fiscal deficit of $69.8 m and a primary surplus of $586.9m. A robust fourth quarter will be necessary to meet these projections,” said the Fiscal Responsibility Council.

“The FRC notes that to achieve the targeted fiscal deficit of $69.8m, a fiscal surplus of $96.6m over the final three months of FY 2024/2025 must be realised. Over the comparative period in FY 2023/2024, a fiscal surplus of $20.2m was produced. A strong final quarter performance will be needed, although downside risks associated with possible underperformance in some revenue categories threaten this projected outturn.”

The Fiscal Responsibility Council also highlighted the “inconsistencies” in amounts of the fiscal and primary balances given by the Prime Minister during his Budget communication and the data contained in the Draft Estimates of Revenue and Expenditures.

The FRC said the Prime Minister’s Budget Speech noted a fiscal deficit and primary balance for the period of $178.9m and $268.4m respectively, while the primary balance derived from the data provided in the Draft Estimates document was $296.7m and $166.4m fiscal deficit.

“The Budget Speech states a fiscal deficit and primary balance for the period of $178.9m and $268.4m respectively, compared to the $166.4m fiscal deficit and $296. m primary balance derived from the data provided in the Draft Estimates document,” said the FRC.

The report also highlighted the difference between the $135.4m Budget surplus projected by Mr Davis for April 2025 and the actual $2.1m deficit outcome, suggesting improved “administration and reporting of fiscal data” by the government.

“Additionally, while the FRC notes that fiscal performance data for the month of April 2025 provided in the Budget Speech was preliminary, the $137.5m difference in the fiscal balance for the month as presented in a subsequent Ministry of Finance publication suggests a need for improvement in administration and reporting of fiscal data.”

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