What is in and what is out.
On Friday, May 19th, 2023, the Turks and Caicos Islands Government passed the budget for the year April 1st 2023 to March 31st, 2024 in the amount of $414.9m in operating revenue, $358.6 m in operating expenditure resulting in an operating surplus of $56.3m. However, there are grants and contributions receipts of $2.93m and capital contributions of $65.5m resulting in an overall deficit of $6.3m.
The theme for the year’s budget is entitled “Delivering on the Citizen’s Contract: Achieving Social, Economic and Environmental Progress for All.” In review of this budget, we need to ask ourselves does the budget reflects the theme. Furthermore, we need to review the actuals for 2022/23 and determine if the prior year budget was a success. You see for the past couple of years, this Government and successive Governments boast about having the largest budget ever, however, if we do not implement the capital expenditure as per the budget, then we will have a big surplus, a lot of money in the bank and no major capital projects.
Review of 2022/2023
Before we review the 2023/24 budget, let us look at the 2022/2023 actual results compared to the budgeted figures for 2022/23. The highlight is that more than $50m was budgeted for capital contribution but only $18m was used. I think this should be a major concern as our country desperately needs many capital projects. This issue of underspending on capital projects has been ongoing for years. Because of this, people become hopeless when they don’t see any evidence of physical development taking place.
It is also interesting to note that the stamp duty revenue was budgeted for $80m but the actual revenue was $57m. I believed the budgeted amount of $80m was derived because the actual stamp duty revenue was $87m for 2021/22. Despite not achieving this, the overall actual recurrent revenue for 2022/23 of $408m was still higher than the revised estimate of $399m. This is because all the revenue line items except for the stamp duty and business and banking related receipts were higher than the budgeted amount. Accommodation tax of $102m was the largest contributor for revenue which demonstrates how critical and reliant we are on tourism.
On the recurrent expenditure side, there were savings. The actual expenditure was $216m but the revised estimate was $226m. The major reason for this savings is due to the actual salaries cost being 106m versus the revised estimate of $115. I believe this is due to the number of vacancies that exist in public sector.
Health continues to a major expenditure component with $60m coded to NHIP and Hospital charges.
What is in 2023/24 budget?
The top three revenue items remain on the same trend as large year with accommodation tax being the largest in the amount of $107m followed by import duties of $98m and stamp duty of $57m.
There is a $14m allocated to professional and consultancy. Salaries and wages $129m. The Government is undertaking a salary review, so I assume this is reflected in that along with the ongoing vacancies.
The budget for SIPT legal aid is $4.1m when the actual last fiscal year was $2.6m. sure, not sure what is driving this increase.
Transfer to NHIB and treatment abroad is consistently around $35m. There is no reduction in this.
The Statistics Department will now be an authority.
$7m for Grand Turk Enhancement project. Hopefully, this will materialize this year as this project has been outstanding for a very long time. This project will have a staff managing the initiatives.
As mentioned above, $65 million is allocated to capital expenditure. $1.9m is for police boats. $11.9m on South Port Development Project, $3m for housing project, $1m for roads improvements, $5m road and electrification projects $2.8 for bridges and ponds. $1.8 m for digitalization. Of course, $2m was budgeted last year but only $241k was spent. There is also budgeted 1.5m on immigration E gate. $2m for Digitization for Inland Revenue. $2m on national identification card. There is $1.5m for the construction of a hanger. There are number of community projects such as Horse stable renovation, Fuller and Clement Walkin park $650k, Bambarra Beach park and expenditure on Sapodilla Baym Conch Ground and Community Center Bottle Creek.
What is not clear in 2023/24 budget?
I know it is the plan of the Government to waive the duty exemption for construction materials for long term apartments, however, the imports duties revenue is still high and is higher than the prior year.
We continue to face the high cost of living. In 2022/23, there were several initiatives, but I am not sure whether these initiatives will remain in 2023/24 budget. I didn’t listen to all the budget debate so maybe it was addressed.
It is not clear what measurements are in place to achieve the revenue. Of course, we are totally dependent on tourism which is driven by the private sector. I suppose the Government can argue that the initiatives by the DMO will help to meet or achieve the budgeted figures.
Like each year, the budgeted revenue continues to increase. However, the main concern for me is the capital expenditure. What will be different from the prior years? How will ensure that the capital projects are achieved this year?
I wish the Government the best in this financial year. I also want to thank the Leader of the Opposition for his wonderful contribution. Of course, both political parties try to get credit for the revenue, but I am not convinced that any of them put any measures in place to achieve the revenue. I believe no matter who the Government of the day is, the revenue may be the same. Everything is about timing and the private sector is doing a great job promoting the Turks and Caicos tourism industry.