Last week, we discussed the End of Year report for 2017, prepared by the Ministry of Finance. The Report gave an updated position on the performance of the economy in 2017 following the presentation of the 2018 Estimates of Revenues and Expenditures last November. Our analysis of the report concluded that, while the macroeconomic fundamentals reflect a stable economy, the lack of a diversified economy as well as external shocks are stymieing efforts to achieve the desired level of growth. The actual GDP growth in 2017 was 2.1 percent, the lowest since 2008 where it was 2.0 percent.
A particular area of concern relates to the fiscal deficit. Over the last 25 years and possibly longer, almost every year, public expenditures have outstripped revenue collections. The following table shows the recorded fiscal deficit for each of the last four years as well as projections for 2018:
It is evident that an urgent need exists to narrow the gap between revenues and expenditures so that in the longer-term a balanced budget can be achieved, thereby eliminating borrowings to finance the expenditures on Government programmes and activities. At the end of 2016, the overdraft on the Consolidated Fund was $132.876 billion. When the projected fiscal deficits for 2017 and 2018 are taken into account, the overdraft at the end of 2018 is estimated at $189.046 billion!