Billion Dollar Budget in 2017

Prime Minister and Finance Minister, Dr. Keith Mitchell has unveiled an EC$1, 100, 578, 144 Budget for 2017 fiscal year, with a number of fiscal relief measures to be implemented in the country under the theme: “Working together to build on our successes for a better country.”

Prime Minster and Finance Minister Dr. Keith Mitchell and his mother as they enter the Trade Centre last week Friday

Prime Minster and Finance Minister Dr. Keith Mitchell and his mother as they enter the Trade Centre last week Friday

The billion dollar budget presented to the nation during a joint sitting of the House of Representatives last week Friday at the Trade Centre in Grand Anse, represents an increase of EC$99, 578, 144 from the 2016 Budget, which stood at EC$ 1.1 billion.

“All records show that we continue to be a productive and progressive economy,” Dr. Mitchell boasted as he announced the fiscal measures that will take precedence in the upcoming year.
Among the measures, Dr. Mitchell announced were the intention to pay two installments in salary increments, one for 2014 and the other for the period January to June 2016” today (Friday, December 16).

He said there will be a “one-off” payment made to all public servants who served a substantive portion of the period 2014-2016, in recognition of their contribution and shared sacrifice during the implementation of the Washington-based International Monetary Fund (IMF) supported Structural Adjustment Programme (SAP).

Dr. Mitchell said his administration is hoping to make this payment by February 2017 and that negotiations for salary increases and fringe benefits for public officers are also on the agenda for the 2017-2019 period.

He expressed optimism that negotiations can be completed by year-end, with a projected implementation date set for January 1st 2017, once agreements have been reached with the various public sector trade unions.

The Prime Minister announced a small $2 reduction in the price of the 20lb cylinder Liquid Petroleum (cooking) Gas (LPG) from $42 to $40 with effect from January.

Other relief measures announced to come on stream with the start of the new fiscal year include a 5% reduction in the income tax rate from 15% to 10%, the implementation of a tax registration amnesty for the period January to March 2017, which will facilitate the registration of tax payers who were not previously registered with the Inland Revenue Department (IRD) without penalties.

Additionally, Dr. Mitchell declared that there will be no income tax applied on pension for the new fiscal year and there will be a tax filling amnesty for the annual stamp tax for the period 2013-2015, without penalty between June – August 2017.

The annual stamp tax rate has also been reduced from 0.75% – 0.07%, which will take effect for the tax period 2018.

Dr. Mitchell told the joint sitting of the House of Representatives that these relief measures are possible due to the “decisive and united leadership (of his government) and the sacrifices of our people”.

“We have built a solid foundation and now we are better positioned to pursue this philosophy (of putting more money into the hands of Grenadians), he said, adding that “even before we implemented these measures our tax rates must be noted (as being) among the lowest in the Eastern Caribbean Currency Union (ECCU). Check the facts, the only other country lower than Grenada is Antigua.”

Dr. Mitchell pointed out that job creation is a major focus of the 2017 budget with a number of public sector projects and special projects, to come on stream, providing more employment opportunities for citizens.

Major public sector projects include the St. Patrick’s road network upgrade, which comprises the rehabilitation and upgrading of two road sections in St. Patrick’s, measuring 16 kilometres or 10 miles from Duquesne to Sauteurs and from Mt. Fendue to Pointzfield, the construction of four bridges, and the rehabilitation of 12 smaller bridges and proper drainage facilities as a total cost of 106.7M.

PM Mitchell disclosed that 5.0 million has been allocated to finance 20 special community-oriented projects, which will be administered through small contractors and is estimated to create over 800 short-term jobs.

The overall 2017 Budget comprises: Recurrent Revenue: $657.2M, Current Expenditure: $599.0M, Capital Expenditure: $154.3M, Current Account Surplus: $58.3M, Primary Surplus (after grants): $141.9M, Principal Repayments/Amortisation: $347.2M, and Overall Surplus (after grants): $55.8M.

The 10 largest allocations are debt – $433.4M; the Ministry of Education – $104M; Ministry of Finance and Energy – $80.4M; S79.9M for the Ministry of Health, Social Security; $60.0M for the Ministry of Communications, Works, Physical Development, Public Utilities, ICT and Community Development; Pensions and Gratuities – $53.6M; Police – $50.3M; the Ministry of Social Development and Housing – $39.4M; Ministry of Youth and Sports – $34.3M and the Ministry of Economic Development, Trade and Planning – $26.9M.

In addition, the Ministry of Agriculture received an allocation $27.4M, with more major projects and programme to come on stream for 2017, while the Ministry of Tourism and Civil Aviation was allocated $22.3M, with an increase in airlift projected in 2017.

The Prime Minister also announced that the country’s economy is projected to grow by 3% in the coming year, with the areas of agriculture, tourism and construction and education being identified as the main growth boosters.

In an interview with reporters after the delivery of his billion dollar budget package, Dr. Mitchell said the decision to implement the relief measures is part of government’s commitment to the shared sacrifices of the SAP.

“Remember, when we did the programme we said let us share in the sacrifice and when the benefits come we will also share; We are still under the programme, so I cannot do anything beyond what is allowable based on our own agreements. So what you see us doing is part of our commitment to share the sacrifices within the constraint and context of the SAP. So maybe if we did not have a SAP we would have more benefits,” he added.

In commenting on the 2017 Budget statement, former Finance Minister and Political Leader of the main opposition National Democratic Congress (NDC), Senator Nazim Burke, described it as an “election budget.”

Sen. Burke said he is “not surprised by the loose promises that are being made”.

“We have actually said before that at the end of this Structural Adjustment Programme and as the election approaches, we expect that the government is going to say that the period of sacrifices has ended and that it is now time to roll out the goodies…”, he said.

“…We will observe a reversal in taxes and the burdens that have been imposed on the nation in order to win the next election and we anticipate and expect that immediately after the general election, should the NNP ever win, which is a far-off possibility they would again impose the very same taxes”, he added.

According to Sen. Burke the question to be answered is whether or not the NNP regime of Dr. Mitchell is going to achieve the capital programme that was spoken about.

Sen. Burke referred to the last figures that were published at the end of October which shows that the government was barely achieving 50% in what it said it was going to do as far as capital programmes were concerned (with respect to the 2016 Budget).

He said: “The grants are half of what they are. So if the government is making this primary surplus as it says it is…where is this money going, what is it being used for?”

According to Sen. Burke, the monies are “not being used to undertake capital expansion projects which are essentially job creation initiatives (to) expand the economy”.

“The grants that they said they would collect they collected half of it, the capital programmes that they said they would expand upon, they have done half of it. So the question is where are these jobs being created and why are they going to be created in the coming year?

Sen. Burke stressed that he has heard these promises before in the 2015 Budget and at the end of the day these so-called gains that the Prime Minster is speaking about “are simply not trickling down to the ordinary man.”

Labour Senator Raymond Roberts shared the same sentiments as expressed by Sen. Burke.

He said: “I have counted in excess of 10, 000 jobs…I don’t know how these jobs are going to be created…if you look back to 2015, 2016, you would notice that Dr. Mitchell has become the ultimate expert on revealing numbers.

“In the same breath though, I think public officers feel a sense of relief, not a great sense of relief though, because 15% reduced to 10% remember these workers who built their houses (did so) on a promise that tax threshold would have been at EC$60, 000,” he added.

According to Sen. Roberts, PM Mitchell had indicated that the threshold would have been a model for the world but shocked everyone by bringing it down to EC$36, 000.

“So clearly, they (workers) are not really better off and in fact they remain in poverty”, he remarked.

Sen. Roberts emphasised that “the point is that workers have lost a tremendous amount as a result of the sudden drop of the threshold of personal income tax”.

“So what I can tell you is – it sounds like election is around the corner and Dr. Mitchell sounds like he is playing to an audience but I hope our society would be much more sensitive to the reality of just calling mere numbers”, he said.

Sen. Roberts stressed that the Labour movement cannot “dispute the fact that he (PM Mitchell) has removed taxes on pensions, because we requested that (and)  clearly that’s one of the things we commend and we cannot dispute the fact that he has put his reputation on the line to have pensions dealt with before the end of 2017”.

“As he said if he wants a legacy that has to be it, so we can’t deny that he was very pinpoint on those issues.”

Sen. Roberts alluded to the fact that there was no mention in the budget of any initiatives to enhance the tourism sites in the country but that “all we are hearing about are hotels…and that’s not going to do it for us”.

Additionally, he said it is hoped that the Prime Minister makes good on his promise when he speaks about regularisation of public officers,” noting that “too many of them are on contract year after year.”
1st Vice President of the Public Workers Union (PWU), Rachael Roberts said, the Union has been “looking forward to the regularisation of public workers for a very long time now and are very appreciative” of the announcement made in budget 2017.

However, Roberts said the Union is still “very concerned, because we have always stated that the employment of Public officers is under the Constitution and we continue to hear the government state the employment of public officers through a private agency”.

“And when we speak of Constitutional reform and we see that the Constitution is being violated by the employment of public officers, it is a worrying factor. And we would really want that when the regularisation happens that the status of public officers of our membership would change, so that they will be properly employed, she remarked.

She indicated that the Union is also “looking forward to the pension issue being addressed speedily because we know that we have a number of persons out there who are suffering in terms of pension.”

Public officers on the island were effectively ruled out of a state pension when the 1979-83 left-leaning People’s Revolutionary Government (PRG) of late Prime Minister Maurice Bishop established the National Insurance Scheme (NIS).

The high court restored the pension when it ruled that the PRG law was unconstitutional.

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