The Barbados-based Caribbean Development Bank (CDB) is reporting that fiscal performance in St. Kitts and Nevis strengthened in 2006 for the fourth consecutive year with improvement in the current account balance, a reduction in the overall deficit, and a higher primary surplus compared with 2005.
"The current account balance shifted from a deficit of $2.3 million (0.1% of
GDP) in 2005 to a surplus of $6.4 million (1.4% of GDP) in 2006," said the CDB in its 2006 Report released at the Bank's Board of Governors Meeting in Caracas, Venezuela last week.
Restraint in capital expenditure and net lending and a relatively high level of capital receipts and grants resulted in a reduction of the overall fiscal deficit to $9.8 million (2.1% GDP) in 2006 compared with $18 million (4.2% of GDP) in 2005. The primary surplus in 2006 almost doubled to $29.1 million (6.2% of GDP) compared with $17.4 million (4.1% of GDP) in 2005.
According to the report, the fiscal improvement in 2006 resulted mainly from increased revenue, reflecting continued strengthening of tax administration at both the Customs and Inland Revenue Departments, the introduction of the electricity surcharge, increased retail prices for petroleum products, new excise charges on alcohol and tobacco, and a higher rate for the social services levy.
It also noted however "notwithstanding the strong fiscal performance in 2006, the maintenance of fiscal stability will require appropriate measures to further increase revenue collections and restrain growth in public expenditure." ~~Adz:Right~~
CDB said that recurrent revenue inflows expanded by 13.3 percent to $182 million in 2006, mainly as a result of continuing efforts at improving the efficiency of tax administration, strong growth in domestic economic activities, and the impact of policy measures implemented during the year.
The main revenue categories, which recorded substantial increases in 2006 were receipts from the Electricity Department and from stamp duties.
Total current expenditure grew by 7.8 percent to $175.6 million in 2006 compared with $162.9 million in 2005, reflecting increases in all categories of recurrent expenditure.
Outlays on wages and salaries increased by 3.9 percent to $62.8 million
(35.7 percent of current expenditures) in 2006, compared with $60.4 million
(37.1 percent of current expenditure) in 2005. Expenditure on goods and services grew by 12.8 percent to $47.9 million in 2006 from $42.5 million in 2005, which was accounted for mainly by the cost of fuel used to generate electricity. Interest payments grew by 9.8 percent to $39 million (22.2 percent of current expenditure) in 2006 from $35.5 million (21.8 percent of current expenditure) in 2005, reflective of the growing level of public sector indebtedness.
