Government budget deficit smaller than expected

Finance Minister Roy McTaggart speaking at Thursday's media briefing . Photo: GIS

Government has closed the 2020 financial year with a smaller budget deficit than the $168 million shortfall estimated in mid-2020.

During a press conference last week, Finance Minister Roy McTaggart said, “We are in a much better place than we anticipated at the start of this pandemic.”

Preliminary financial results for last year show that central government is expected to end the 2020 financial year with an operating deficit of $50.1 million. If non-core government entities and other potential adjustments are considered this could increase to a $75 million deficit for the public sector.

McTaggart said that the financial picture would become clearer in the coming weeks as the figures are only “preliminary”.

But he added, “Against the backdrop of an earlier estimated $168 million deficit, a $50 to $75 million deficit leaves us in a far better position than we were before.”

In addition, he reported that government had $449 million in cash reserves at the end of 2020.

“This is the result of the work done over the past two terms to secure the country’s finances, and it is this buffer that has given us a space to keep health and safety at the forefront of our decision making, rather than money,” McTaggart said.

Government took in $758.9 million in operating revenues for the year, about $70 million lower than the budgeted amount of $828.8 million.

Operating and financing expenditures of $809 million, on the other hand, were $49 million higher than the budgeted $760 million.

The higher government expenditures include about $65.4 million in COVID-19-related costs, consisting of $33 million spent on testing kits, personal protective equipment and quarantine costs; as well as $32.4 million used to support families and businesses impacted by the pandemic.

McTaggart said both better-than-expected revenues in some categories and cost savings helped contain the budget deficit.

For instance, revenue from stamp duties on land transfers and mutual fund administrator licences exceeded the initial 2020 projections by $20.6 million and $5.9 million, respectively.

At the same time, government saved a total of $43 million in personnel costs and from lower spending on supplies and consumables.

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