PREMIER’S REMARKS ON LAYING BUDGET 2020/21
Mr. Speaker, in accordance with Section 20(1) & 21(1)-C and 52(1), of the Public Financial Management Ordinance 2012, I rise to Lay before this Honourable House, the Estimates of Revenue and Expenditure for the Financial Year 2020-21 (Consolidated Fund) and the Estimates for the Self-Financing Statutory Bodies for FY 2020-21.
Mr. Speaker, the estimates are being presented amidst global economic uncertainties, stemming from the rapidly spreading novel Coronavirus disease. This disease if not contained quickly, threatens to overwhelm fragile health systems and adversely impact economies. Mr. Speaker this disease can have a catastrophic economic, social and psychological impact on countries. Tourism dependent economies such as ours can suffer gravely, as global tourism related activities have been brought to a halt.
Mr. Speaker, the International Monetary Fund (IMF) has indicated that in the Caribbean the tourism sector employed approximately 2.4 million people and contributed more than USD 62 billion (15.5%) to GDP in 2018. They further stated that, “reduced tourism demand resulting from travel restrictions and the “fear factor” - even after the outbreak recedes - will significantly dampen economic activity and threaten the livelihoods of persons employed in the tourism sector”. This tells us that if Caribbean countries are not careful, even when fears of the Coronavirus may have died down these economies will still be dying. I must also remind us that less three months we start the hurricane season which is predicted to be active.
Mr. Speaker, may I remind us in this Honourable House that this budget is being laid at a time when our borders are closed, and the borders of most of our source markets are closed and is in turmoil. This budget is being laid at a time when there is a need for increased public health spending which is reflected in these estimates. This budget is being laid when the entire country is under 21 days’ curfew as a measure to protect our people against the corona virus. Mr. Speaker, in our local economy, the tourism and transport sector employs more than 13,000 persons annually, whether directly or indirectly and contributed more than USD 357 million of the country’s GDP in 2019.
Mr. Speaker, over the last decade, as a people we have undergone significant austerity measures, which included, paying off our debt and creating fiscal space, to be able to respond to economic shocks. However, this is one of our biggest challenge as the world is now facing similar challenges. This COVID-19 has the potential of taking a huge economic and social toll on the Turks and Caicos Islands.
Mr. Speaker, this budget is being laid in this Honourable House at a time when all of our economic indicators are worsening. A contraction in the local economy is inevitable. Instead of experiencing growth as forecasted earlier this year we are now facing a situation of significant decline in GDP, increase in unemployment and increase in poverty. The unknown at this time is the depth and length of the economic fallout; as a government, the way we manage the crisis will determine the level of impact it has on you, our people.
Therefore, Mr. Speaker, the Government has to act now and be decisive to contain the virus and to reduce the economic impact from the global fall-out.
Mr. Speaker, the preventative measures that we have undertaken to contain the spread of the virus are inclusive of:
· closure of our borders and schools;
· isolation and quarantine of exposed individuals; and
· social distancing measures
· Procurement of Personal Protection Equipment and other equipment
· Increased public health staffing
Mr. Speaker, these measures are geared towards flattening the curve, and avoiding our people from becoming seriously ill. These measures have however, come at a significant economic and social costs, to the islands, but in the end, I believe we will all agree, that it was better to be safe, than sorry. I have no doubt that we will recover from this because we are a resilient people but we cannot afford for our small fragile population to be adversely impacted.
Our fiscal strategy is aimed at injecting cash into the economy in a quick and targeted way, to ensure that spending activities continue. As such, Mr. Speaker, we have announced an economic stimulus package for individuals and small businesses in the form of cash grants-$25.5m. We have announced other measures geared towards lessening the impact of the contraction of the economy and other measures to ensure that we are ready to greet our guests, as soon as the global market is open for travel-$19.5m. Mr. Speaker, we have allocated $35.2m in Capital Expenditure plan to continue to circulate cash in the economy. This Mr. Speaker, is in addition to the over $30m in capital projects that are committed and ongoing.
Whilst, doing this, Mr. Speaker, we will continue to focus on the credible management of government spending.
The Expenditure envelope for 2020-21 is $337.0m.
Recurrent expenditures of $294.9m are expected to be approximately $66.8 million higher in 2020-21 than the forecast outturn for 2019-20 and $46.7m above the original estimates for 2019-20. Non-Recurrent Expenditure is estimated at $6.9m, it is mainly for the ongoing corruption trials. As I stated earlier, $35.2m has been allocated for 2020-21 Capital Expenditure, in addition to the over $30m in projects that are being carried forward from 2019-20.
FUNDED POLICY PRIORITIES
Mr. Speaker, the Estimates have provided for:
· Early Childhood Education
· New Primary School in Providenciales
· Technical Vocational Education Training (TVET)
· Private School Subsidies
· School Nutrition Plan and Fitness Policy
· Transformation of the Sports Department into a Sports Authority
· Strengthening of the Primary Health Care Services and response for COVID-1
· Investment in National Security and Border Protection
- Community Policing – We will further strengthen the numbers for the Police by 39
- Sri Lanka Investigation
o National Security Secretariat Unit(NSSU) – The establishment of this Unit will be a Game Changer and will focus a Joined Up Government approach to national threats.
o Contingency Force – This Force will be the beginnings of our very own Defense Force.
o Immigration and Border Protection
o Prison Management and Prison Redevelopment towards making the Facility and Programs fit for Rehabilitation of Offenders
· Investment in Protection of the Environment and Climate Change Risk Reduction
o With key investment in staffing and equipment for Disaster Management
o With funding for key Environmental Impact Assessments to complete the National Parks Works and recruitment of key personnel for the Department of Environment and Coastal Resources Management
· Investment in Critical Bodies
o Establishment of a Public Utilities Regulatory Body which will join up oversight over critical service providers in electricity, water and telecommunications.
o Gaming Commission
o Sports Commission
· Funding Anti-money Laundering Initiatives so as to comply with our legal obligations.
Investment in Social Security, Civil Servants Development and Welfare
o $250k investment as seed money for the Public Service Credit Unions
o Home Help - To support our vulnerable, we have increased this by 30%.
o Government Terminal Benefits Scheme
· The Economic Stimulus Package of $45m inclusive of cash grants, waivers and write offs.
· Increased Contingency Funding
· Port Redevelopment – This Project remains extremely critical to ensure we have a resilient Port.
Staff Costs at approximately $104.7m, is 39.3 percent of Recurrent Revenue. Pensions and Gratuities are forecast at $7.3m.
Over 160 new positions have been created. Collectively, we are adding, 68 new positions for border protection and security.
Another 58 positions have been added to the educational transformational programme. A trade school is being established.
Eleven (11) new positions are being created for the Ministry of Home Affairs, Transportation and Communication.
Transfers to the NHIP and the Hospital charges will account for $55.8 million or 21 percent of the Recurrent Revenue.
Whilst also, providing:
· $5.2m is allocated for Travel and Subsistence expense.
· Utility and communication allocation of $6.8m or 2.6 percent of recurrent expenditure.
· Allocation for Rental of Assets is $5.2m.
· Subvention allocations (Excluding NHIB) is $19.4m is 7.0 percent of recurrent revenue.
o The Gaming Commission -$2.0m and the Sports Commission -$ 2.2m
· Training expense across ministries, is now allocated at $1.1m.
· Maintenance allocation is $10.1m.
· The Contingency Fund is now at $6.3m.
· Professional and Consultancy is forecast at $6.7m.
· Grants and contributions at $33.5m are being allocated for payments to Regional Institutions and airline subsidies and welfare grants for the economic stimulus package.
The top ten or areas of spending in the budget are:
1. $84.7m or 25.1 percent of total expenditure for the Ministry of Health, Agriculture and Human Services; $81.1m of recurrent expenses and 3.6m in Cap. Exp. This is inclusive of the $33.0m allocation to the NHIP.
2. $53.9m or 16.0 percent for the Ministry of Finance, Trade and Investment; That is $20.4m for recurrent expenses, $25.0m for the Stimulus Package and 7.6m for Capital expenses.
3. $47.3m or 14.0 percent of total expenditure for the Ministry of Education, Youth and Library and Social Services. $39.2m of recurrent expenses and $8.1 m in Capital Expenditure.
4. $31.8m or 9.4 percent of total expenditure for the Royal Turks and Caicos Islands Police Force. That is $26.1m for recurrent expenses and extraordinary costs for the ongoing corruption trials $2.6m and 3.1m for Capital expenses.
5. $26.7m or 7.8 percent of the total budget for the Ministry of Infrastructure, Housing, Planning and Development. That is $18.4m for recurrent expenses and $8.2m for Capital expenses.
6. $13.8m or 4.1 percent for the Ministry of Immigration, Citizenship, Labour and Employment Services. With recurrent budget allocation of $10.4m. Extraordinary Costs for the repatriation and detention expenses $2.4m and Capital Expenditure is $900k.
7. $11.7m or 3.5 percent for the Ministry of Tourism and Environment. With recurrent budget allocation of $10.9m. Capital expenditure is $850k.
8. $15.1m or 4.5 percent - can be announced for the Ministry of Home Affairs, Public Utilities and Transportation. Approximately $2.3m, of the allocation is for the Capital Expenditure.
9. There will be a $7.6m or 2.2 percent of the total budget for the Judiciary Administration; Allocation for the SIPT legal aid programme is $3.3 m.
10. Finally, there will be $7.3m or 2.2 percent of the total budget for the Attorney General’s Chambers. Recurrent expenses will account for $6.9 m. Capital Expenditure for the AGC is $400k
Within the proposed budget there will also be:
· $17.1m for pensions and gratuities, Catastrophic Risk Insurance Contingency fund and Debt Servicing.
· $8.6m for the Governor’s Office
· $2.9m for the House of Assembly
· $3.3m for the Office of the Premier, Local Government and Community Affairs
· $2.7m for the Deputy Governor’s Office
· $1.6m for the Director of Public Prosecutions
Funding the Expenditure Plan
The Expenditure plan will be funded from Government receipts and excess cash reserves.
Recurrent receipts of $261.6 million are being forecast. It is expected to be approximately $51.4 million lower in 2020-21 than the forecast out-turn and $42.6 million lower than the approved Estimates for 2020-21
Non-recurrent revenue is forecast at $4.3 million.
Total revenue is $266.3 million.
Import and other Customs Related duties are forecast to contribute approximately $100m (38 percent) of recurrent revenue.
Accommodation Tax is forecast to contribute $45.8m, approximately 17 percent of the receipts.
Work Permit and other Immigration Fees forecast at just above $30.1m is expected to contribute 11.1 percent of the revenue that is required.
Stamp Duty on Land Transactions, is expected to generate approximately -$21.3m or 8.0 percent of Revenue.
Excess Cash Surplus from the Port’s and Airport’s Authority is forecast at $12m.
We are also grateful to our donor partners, collectively they will contribute approximately $4.3m.
Other revenue sources will account for $53.0m.
Operating Deficit/Debt Financing
Operating deficit before loan repayment is forecast at $70.6 million.
Loan repayment is forecast at $2.2 million for the fiscal year.
It is estimated that $1.1 million in loans already agreed with the CDB will become available in 2020-21.
It is being proposed that the deficit will be funded from cash reserves - $73.0m.
Capital Programme Contribution to Budget FY 2020/21
The Capital Programme for FY 2020/21 is approximately $35.2 million, and it is aligned to the Fiscal and Strategic Policy Statement (FSPS) and details the strategic plan and priorities of the government. The Capital Programme builds on the initiatives proposed in the recurrent budget and provides the basis on which the economy will continue to thrive in this financial year and beyond. Amidst the uncertainties in the world and the impact of COVID-19, the Capital Programme will continue on its path of creating employment opportunities for many Turks and Caicos Islands thus enabling them continue to take care of their families in these uncertain times.
Focus of the Capital Programme – FY 2020/21
Enhancing National Security
Mr. Speaker, we continue as a government to strive to address illegal immigration, as this can have a negative impact on our economy which is tourism related. With the threat of COVID-19 on our door steps we have to be ever mindful that when illegal sloops arrive, we don’t know if the persons coming are infected and this puts an additional strain on our health care workers and increases our repatriation costs annually. To address these problems over two financial years a total of $5.7m will be made available in the following areas:
· Police Boat - $3.8m
· Drones for the Police - $150,000
· Vehicles for Police - $500,000
· Management of Informal Settlements - $400,000
· Additional Radar Coverage - $600,000
· Purchase of DECR Vessel - $250,000
Mr. Speaker, our children continue to be the building block of this economy and my government continue to provide for them to ensure that no one is left behind. The proposed initiatives for funding of $10.7m includes over a period of two financial years:
· Technical Block for Raymond Gardiner High School - $2.5m
· Retrofitting of New Vocational School - $500,000
· Construction of additional classrooms at the Long Bay Primary School - $5m
· Furniture and equipment for Schools - $500,000
· Special Needs School for Grand Turk - $700,000
· Upgrading Schools - $1.5m
Mr. Speaker, notwithstanding the impact of COVID-19, our islands are still vulnerable to natural disasters and the hurricane season is fast approaching. My government will continue with its funding for the Catastrophic Risk Insurance Facility, and additional measures includes the following initiatives over two financial years totaling $6.4m. They are:
· Spare parts for Water Undertaking - $300,000
· Purchase of a new storage tank for Water Department for Grand Turk in the event that we are impacted, there is still a steady source of water that is sustainable for the island of Grand Turk - $2.5m
· Upgrade of Water Tank South Caicos - $750,000
· Purchase of mobile antennas for DDME - $300,000
· Back-up generators for all Essential Facilities - $1.9m
· Heavy Equipment for Public Works Department - $600,000
Community Development Projects
Mr. Speaker, community development projects are important to this government as it improves the lives of citizens, develops talent and helps to grow businesses. My government initiative in this area includes funding over two financial years totaling $8m. These include:
· Construction of Cadet Headquarters - $1.2m
· Blue Hills Craft Market - $650,000
· Improvement Works at Five Cays Community Centre - $150,000
· Road North Caicos - $2m
· Purchase of Garbage Trucks (GDT and XSC) - $540,000
· Mental Health Facility GDT - $300,000
· Leeward Park Phase 2 - $250,000
· Refurbishment of Track at the National Stadium - $900,000
· Agro Park on Grand Turk in my Government’s efforts to improve food security – $950,000
· Grand Turk Sports Complex and Shelter in partnership with United Way, Miami - $1.1m
· Installation of Lights – Parade Ground GDT- $600,000
· Refurbishment of Front Street GDT - $900,000
Mr. Speaker, I am pleased to announce, that my government will spend approximately $32m over three financial years for the South Dock Port Redevelopment. This project has been in the pipeline for many years and it will be a dream come true for many of our stakeholders in the industry. My budget speech will provide more information of the redevelopment project.
Enhancing Service delivery
Mr. Speaker, a number of refurbishment projects budgeted in in the past will be completed in this year and it is my government intention to ensure that civil servants are efficient and effective in delivering their services to the general public. Initiatives in the budget includes:
· Purchase of furniture for purchased and newly refurbished Police Buildings - $500,000
· Furniture for purchased and newly refurbished Government Complex – Ministry of Immigration - $300,000
· Furniture for purchased and newly refurbished Customs Department – PLS - $300,000
· Vehicles for Government - $982,000
· Upgrade of Scientific Lab – XNC - $150,000
· Renovation of DECR Office – XNC - $150,000
Debt Sustainability Ratios
It is also noteworthy to mention that all debt sustainability indicators that were agreed by the Government of the United Kingdom and TCI will remain in intact, with the exception of the provision for having a surplus budget.
SELF FINANCING STATUTORY BODIES
Financial Services Commission
Total Revenue for the financial year 2020-2021 is forecast at $10.6m, this represents an increase of $1.9m, 22% over 2019-20 estimates and 302.3k less than the forecast out-turn.
Expenditure budget of $8.1m is proposed for the FSC. That is an increase of $0.9m, 22.7% over the estimates for 2019-20 and $1.9m or 29.7% over the forecast out-turn.
Operating Surplus before Capital Expenditure
The Financial Services Commission is proposing an operate deficit of $1.9m in the fiscal year and to transfer $2.5m to the TCIG. The deficit will be funded from the Reserve Fund.
Capital projects that are being proposed total $4.4m.
National Insurance Board
The National Insurance Board is proposing an overall income for the financial year 2020-21 of $32.7m is $10.1m or 23.7% below the approved estimates for 2019-20 and $13.1m below the forecast out-turn. Recurrent Revenue is forecast at $27.5m, whilst, interest income is projected at $4.7m. it is
Total Expenditure is $26.3m, that is approximately $3.0m or 14.7% above the approved budget for 2019-20 and $2.9, 12.6% above the forecast out-turn.
Benefits expenses - $22.9m account for greater than 75% of the expenditures.
Operating Surplus before Capital Expenditure
The National Insurance Board is proposing an operate surplus of $3.1m in the fiscal year.
Capital projects that are being proposed total $1.6m.
Unrealized Gain is forecast at $7.5m. Net Surplus is forecast at $9.9m
2020-21 revenue forecast is $6.7m is on par with the approved estimates for 2019-20. It is 650k lower than the forecast out-turn for 2019-20.
Recurrent Expenditure is forecast at $3.5m, is on par with the prior year’s estimates and approximately $260k or 7% higher than the forecast out-turn.
Operating Surplus before Capital Expenditure
Operating Surplus is forecast at $3.2m.
Capital projects that are being proposed total $3.0m.
Excess Surplus -Transfer to TCIG
Transfer to TCIG is planned at $3.1m.
$2.7m is to be transferred from the Reserve Funds.
Revenue is projected at $2.1m, 513k below the estimates for 2019-20 and 241k below the forecast out-turn.
Expenditure is proposed at 1.7m, 150k, lower than last year’s estimates and 300k greater than the forecast out-turn.
Operating Surplus before Capital Expenditure
Operating surplus of $356k is being proposed, it is 350k below the performance of last year and $550k below the forecast out-turn.
Capital projects that are being proposed total $143.5k.
Transfer to TCIG
$500k is projected as transfer to TCIG. Deficit of $223k is to be funded from previous year’s surplus.
Mr. Speaker, the Estimates for the Airports Authority will be tabled at a later date.
Mr Speaker, I lay this Budget amidst great uncertainty in our country, our region and our world largely due to the challenges of the COVID-19 pandemic. But Mr Speaker I am certain of several things that remain unchanged and for which I am a firm believer:
1. That this Government will continue to do what it can for its people and will continue to lead strong in times of crisis for and on behalf of its people.
2. Mr Speaker, I am certain that this Government will continue to deliver and fund the change needed to realise the vision as we crafted it for our country.
3. Mr Speaker, I am certain that God is still on His Throne and that He is in the midst granting his mercy, grace, peace and favour; and
4. Mr Speaker, I am certain that this too shall pass and as a resilient people, I know we will be better for it, once we do not waste the lessons and ignore the opportunities of this crisis.
May God bless us all and may He continue to bless these Beautiful By Nature Turks and Caicos Islands.