(Excerpts of Leader of the Opposition, Honourable Dr Godwin Friday’s 2025 Budget presentation)
The overall budget is $1, 851, 387, 634. As the minister said, ‘It’s a deficit budget.’ The current deficit is $5.6 million. Amortization is $215. 4 million, and the Sinking Fund is $22 million. The overall deficit is $639.9 million and that is stated the minister’s budget presentation.
Some of the concerns that we raised last week in the Estimates debate, as we have done year after year because the problem recurs and that is to look at how the figures are presented, to see if they are credible. And whether the budget is based on a solid foundation. If the foundation is flawed, then everything that comes after equally makes it flawed, in fact it makes the problem worse.
One of the things that we have pointed out over the years is that there is a big hole in the budget which is captured in the Capital Receipts item called Other Receipts. In the summary, there is the revenue that the government intends to collect over the course of the year, the expenditure, Current Revenue and the Capital Revenue. Other Receipts falls within the category of Capital Revenue which means as is presented in the Estimates that those monies are supposed to go towards capital projects.
What we have here is a situation where you have under Other Receipts $280.5 million. Last year, it was $215 million. The Other Receipts is a category of funding that the government puts in the Estimates but which they never receive very much of. It accounts for this year, 15% of the total expenditure of the government, and they don’t know where the money is going to come from. If you put it as a percentage of Capital Expenditure where it is intended to spend, it accounts for 40% of Capital Expenditure. They never collect much of this money. As represented, it is a gaping hole within the budget.
According to the Director of Audit, in the 2019 report for example, she indicated that $198 million in Other Receipts budgeted, yet only $3 million was raised. That’s less than 2% of the Capital Revenue. So, where is the rest of the money coming from? And remember, according to the Estimates on roman numeral vii, it indicates that Other Capital Receipts comes from domestic sources. This is after having accounted for all of the borrowings and all the grants that they say they would get during the course of the year. So, it’s quite clear that it is unrealistic.
The question we ask ourselves year after year, is why do you put in the budget? Can you imagine a business running its affairs like this; a CEO presenting to his board or shareholders the financial statements, said we are making a profit of $100 million. We have $50 million. We are not quite sure where we are going to make that money, but we are projecting that profit. They will fire him! We have been urging the people of this country to fire the government for a long time now.
We have asked many times of the minister to explain it and he usually ignores us. But this time, he said that he would try to explain. However, what he says to me compounds the confusion. If we look at page 93 of the budget presentation of the Honourable Minister of Finance. He sets out in summary form various aspects of the funding that they will receive and how it’s going to be allocated. On page 93, Other Receipts, he sets out to explain, he says Other Receipts represents, ‘The financing for capital budget for which the source of funds is yet to be determined. Secondly, it includes the financing of the amortization and thirdly, it includes the Sinking Fund contribution and the fourth component, it includes modest current account deficit.’ He then sets out each of these the numbers, the unidentified capital financing amounts to $33.2 million. The amortization amounts to $215.4 million, the sinking fund amounts to $ 22 million and the current account deficit is $5.6 million. That adds up to $276.2 million. It does not even add up to the $280.5 million that he said is for Other Receipts. So even the figures that they present here do not add up to the amount.
Here is the explanation that he is presenting. He said, ‘During the period of the preparation of the budget, negotiations for funding for several capital projects are ongoing. It would therefore be premature to identify a given funding agency as financing project A or project B. Although, there is a strong likelihood that the funding may come to fruition during the fiscal year.’ We know however historically that they don’t get anything more than 5%. The Director of Audit usually reports on this but they are behind time. The most recent one we have is for 2021. But it is clear, that they don’t receive this money. He goes on, ‘as funding arrangements are concluded the finances raised will be accounted for, on the basis of their source, be there external loans, grants or local loans.’
What we have here is a situation where it appears that what the minister is saying that this is how we come up with this number for Capital Receipt because we take these things into account and we put them together and this somehow balances the budget, but it is not a source of revenue. A deficit is not a source of revenue, amortization is not a source of revenue.
He said that Capital Receipts is made of amortization which means that it has to be paid at some point. If it has to be paid, then the money has to come from somewhere. The money can’t come from amortization. Where does it come from to pay amortization? Amortization is paid all the time.