NOT ALL BLACK AND WHITE: Moving fiscal deficit goalposts
During the Estimates Debate, the Minister Of Finance stated that the fiscal deficit for the year now ending would be around 4.2 per cent, rather than the 6.3 per cent reported in the Estimates at Table 2 on Page 2.
Mr Sinckler said the revised current revenue for 2015-16, on the accrual basis, was now $2.771 billion, and declared that the deficit for the current fiscal year would be 4.2 per cent.
This did not sit well with Opposition Leader Mia Mottley, who, following the numbers in the Estimates set out at Page 2 noted that, for fiscal 2015-16, the difference between current revenue of $2.668 Billion and expenditure of $4.239 billion was $1.57 billion, and, with projected nominal GDP at $8.92 billion, the Estimates had put the overall fiscal balance as a percentage of GDP at 6.3 per cent, or around $562 million.
That number is more in line with the figure for the current year given in last year’s estimates, which put the fiscal deficit at $535.3 million on the accrual basis.
So which is it? The fiscal deficit seems to be – if not a moveable feast – then a moveable goalpost.
In his August 2013 Budget speech, in which he announced severe measures under a 19-month structural adjustment programme, Mr Sinckler said that “by the end of the 19 months’ timeframe, the deficit could be reduced to 2.8 per cent of GDP . . . (and) for the first seven months, which represent the period September 2013 to March 2014, the size of the deficit reduction would be $213.8 million or an estimated 5.4 per cent of GDP . . . ”.
However, according to the most recent Central Bank of Barbados press release (December 2015), the fiscal deficit at the end of the 19-month period (the end of fiscal 2014-15), was not 2.8 per cent of GDP but 6.8 per cent. As for the impact of the first seven months on the outturn for fiscal 2013-14, the deficit was double the 5.4 per cent envisaged, at 11 per cent. (CBB December Press release Page 11).
Returning to the competing deficit figures for the year now ending, the Opposition Leader said Mr Sinckler had changed “measurements and comparative analysis” to make the Estimates look better than they really were.
Maybe the Minister of Finance could explain the reason why he used the revised “accrual basis” revenue figure of $2.771 billion, to calculate his version of the fiscal deficit, and not the $2.669 Billion figure shown in the Estimates at Page 2, while at the same time still using the page two figure for Expenditure of $4.24 billion.
Doing that, and also taking the capital expenditure as $401 million instead of the $253 million shown on the same page, seems to have brought Mr Sinckler to 4.2 per cent.
According to the Estimates for 2016-17, the government is going to run a fiscal deficit of five per cent in the coming financial year, which in real money, means it is going to have negative net operating balance of $465 million, using the accrual basis.
We’ll see how that one turns out.
Patrick Hoyos is a journalist and publisher specialising in business.Email [email protected]