Local fees and financial services boost government coffers

An influx of financial services fees over the first quarter of 2024 has put government’s coffers on a positive footing, even as expenses such as personnel costs increased by $6.1 million over the same period last year.

Coercive revenue stood at $27.4 million more than budgeted and $33.6 million higher than the prior year-to-date, according to figures from the recently gazetted Unaudited Quarterly Financial Report for core government for the period ending 31 March 2024.

The first-quarter report is the latest fiscal document released on government’s finances. The full financial report for 2023 remains outstanding, and it is unclear when these figures will be gazetted.

Overspending caution

The report shows first quarter generated coercive revenues of $489.5 million, which was 7.4%, or $33.6 million, more than the first quarter figure of $455.9 million for 2023.

The “majority of this change”, the report said, was due to $24.6 million more from domestic levies on goods and services, $4.1 million more in levies on property and $3.4 million more in levies on international trade and transactions.

Due to the cyclical nature of revenues, the first quarter’s results are expected to be the highest earned in any single, three-month period for 2024, according to the report.

“This is directly related to Financial Services fees being due at the beginning of each year,” it said.

The report then cautioned that “over the remaining three quarters of 2024 costs will have to be diligently monitored to ensure spending is not incurred unnecessarily”.

The overall surplus at the end of the first quarter, when combined with the performance of statutory authorities and government companies, was pegged at $260.2 million. That value was $46.1 million higher, the report said, than the $214.1 million public sector surplus that the 2024 budget anticipated for the period.

Though the figures have positioned government “to be optimistic” about its performance, the report noted “should planned increases in activity in both Operating and Capital materialise during the remaining months of 2024, the current surplus to 31 March 2024, will be significantly reduced”.

Higher expenses

Personnel costs for the first quarter were $6.1 million higher than the same period in 2023.

The total cost of $112.7 million for first three months of 2024 still counted, however, towards a savings of $11.5 million in personnel expenses against a budget of $124.2 million, the report said.

These savings resulted from vacant posts across several ministries, portfolios and offices.

A similar situation was highlighted for expenses for supplies and consumables, which were $2.2 million higher than the prior year-to-date costs of $29.9 million.

The $32.1 million in expenses recorded for the quarter, however, was $8.9 million less than the $41 million budgeted.

Transfer payments of $23.4 million for the period were $6.8 million more than budgeted for the quarter, with the report pointing out: “This variance is mainly due to the overages in spending on Scholarships and Bursaries ($4.9 million negative variance) and Financial Assistance ($2.0 million negative variance).”

How financial services fees helped the coffers

Fees from increased registration for exempt companies in the first quarter were higher by $15.5 million than the $78.5 million expected, the report stated.

When compared to prior year-to-date performance, the 2024 results were $15.6 million better, it said.

Partnership fees also exceeded the budget by $8.1 million, owing to higher-than-anticipated registrations in this category. Compared to the previous year, there was a $5.7 million positive variance.

Private fund fees also saw a $4.1 million positive variance and performed better than the $54.1 million anticipated, resulting from an increase of funds registered.

The current year results for these fees are $2.2 million higher when compared to actual results for the prior year-to-date performance, the report said.

These fees are regulatory licences due at the beginning of each calendar year and, the report reminded, “tend to be favourable to budget throughout the first quarter and then level out for the remainder of the year”.

In addition, land transfers were $4.8 million more than last year’s first quarter “due to higher volumes of property transactions coupled with increasing property values”.

The 2024 duties of $21.7 million were $4.3 million more than the comparable quarter in 2023, the report stated.

However, “notwithstanding the overall favourable results in revenues, when compared to the 2024 Budget, there were certain areas that fell short of projected expectations”, the report said.

Other import duty dropped by $5.7 million and Department for International Tax Cooperation filing fees were $3.2 million less than expected.

“However, when compared to the results for prior year-to-date Other Import Duties are on par. DITC Filing Fees are a new coercive revenue that commenced in 2024,” it added.

Government’s cash position for the period ending 31 March 2024 was $702.6 million, with cash and cash equivalents at $36 million more than anticipated in the 2024-2025 Plan & Estimates.