The national coffers
First quarter fiscal performance
Managing a national budget is a critical responsibility for any government, and the approach can vary depending on the country’s economic situation, priorities, and political landscape. Deputy Prime Minister and Minister for Finance, Strategic Planning, National Development and Statistics Professor Biman Prasad delivered the Coalition Government’s first budget on Friday, June 30, 2023 that had the theme “Rebuilding Our Future Together”. Now the report card is out on how the national coffers have been managed in the first quarter of the budget, from August 2023 to October 2023.
GOVERNMENT’S first quarter fiscal performance for the financial year 2023-2024 report states at the end of first quarter (August-October) of FY20232024, Government recorded a net deficit of $21.5million. In the same period last financial year (August 2022 to October 2022) under the FijiFirst government, the net deficit was $289.5m. Total revenue stood at $891.4m while total expenditure amounted to $912.9m.
Fiscal position for quarter 1 FY2023-2024
Permanent secretary for the Ministry of Finance, Strategic Planning, National Development and Statistics Shiri Gounder states in the report total revenue collection of $891.4m for the first three months of the fiscal year represented around 24.1 per cent of the annual projected revenue of $3,700.7m and was below the forecast by $18.4m.
“The underperformance in overall Government revenue was largely attributed to the below forecast collection of $28m or 15.8 per cent in non-tax revenue, while positive outturn was noted in the tax revenue category,” he said.
Compared with the same period last financial year under the FijiFirst government, total revenue collection was higher by $213.3m. Tax revenue receipts for the first quarter was $742.4m, surpassing the forecast by $9.6m and represents around 23.9 per cent of total tax revenue budgeted for this financial year, said Mr Gounder.
“The positive outturn in tax revenue in the first quarter was largely driven by above forecast collection from corporate taxes (up by $17.7m), import excise duty (up by $3.9m), capital gains tax (up by $3.8m), dividend withholding tax (up by $3.4m).”
In the first quarter of the 20232024 budget, the following were noted:
• Social Responsibility Tax (up by $3.4m)
• Personal Taxes (up by $3.2m) • Luxury Vehicle Levy (up by $0.3m)
• Environment and Climate Adaptation Levy (up by $0.1m)
• VAT (down by $21.3m)
• Fiscal Duty (down by $6.4m) • Water Resource Tax (down by $3m)
• Departure Tax (down by $2.5m)
• Export Duty (down by $0.2m) • Fringe Benefit Tax (down by $0.1m)
Tax collections increased by $169.1m or 29.5 per cent when compared with the same period last financial year. In comparison to the same period last financial year, increases were noted in:
• VAT (+$66.1m)
• Corporate Tax (+$43m)
• Fiscal Duty (+$9.4m)
• Excise Duty (+$8.1m)
• Pay As You Earn (PAYE) Tax (+$7m)
• Dividend Withholding Tax (+$5.8m)
• Capital Gains Tax (+$5m)
• Import Excise Duty (+$4.1m) • Departure Tax (+$1.9m)
• Social Responsibility Tax (+$1.7m)
• ECAL (+$0.6m)
• Luxury Vehicle Levy (+$0.3m)
“The upbeat performance in tax collection in the first quarter of FY2023-2024 is attributed to the changes in the VAT rate, Corporate Tax rate, Departure Tax and Custom Duties,” said Mr Gounder.
Government spending and debt
Total Government spending for the first quarter of 2023-2024 was $912.9m, lower than the forecast by $345.7m. “The spending level represents around 21 per cent of total budgeted spending for this financial year and is anticipated to pick-up pace in the coming months,” said Mr Gounder.
In the review period, both operating and capital expenditure were below forecast by $243m and $59.5m, respectively, he said.
Government’s total debt position at the end of October 2023 stood at $9,991m, equivalent to 75.3 per cent of GDP. Domestic debt stood at $6,378.5m or 48.3 per cent of the GDP, while external debt was $3,612.5m or 27.3 per cent of GDP, said Mr Gounder.
“The debt mix at the end of quarter 1 comprises 63.8 per cent in domestic debt and 36.2 per cent in foreign debt. At the end of FY2023-2024, total Government debt is projected to be around 79.3 per cent of GDP.”
Economy outlook
Mr Gounder states the fiscal position for the first quarter shows satisfactory outturn and was achieved mainly on the back of lower spending in both operating and capital expenditures.
“While an annual positive outturn was noted in total revenue collections in the review period overall revenue was below forecast and therefore needs to be closely monitored going forward,” he said.
On the macroeconomic front, the Fijian economy is projected to return to pre-pandemic GDP level by the end of this year driven by the strong recovery in tourism and related industrial and services sectors, said Mr Gounder.
“However, risks largely emanating from slowdown in global growth, tight labour markets, rising commodity prices coupled with domestic supply side issues in the tourism sector, loss of labour due to high emigration, rising cost of doing business, and increasing threats from natural disasters poses serious downside risks to the domestic outlook.”