Finance Minister Colm Imbert has revealed that hard decisions will have to be made in the upcoming budget.
The Finance Minister said with the best of intention he does not see government revenue exceeding $40 billion in the next fiscal year and said mandatory expenditure is already 52 billion broken down into $42 billion on non discretionary expenditure and 10 billion to support state enterprises and statutory bodies.
In addressing the Spotlight on the Economy the Finance Minister painted a scenario in which government expenditure consistently increased between 2010 and 2015 and even though government has cut it by roughly $13 billion it has had to borrow heavily to keep the country’s’s economy afloat.
He revealed that by the end of the year the country’s debt to GDP (gross domestic product) ratio is expected to hit 77 per cent.
But even with all of this the Minister of Finance is insisting there will be no devaluation.
Imbert said the Central Bank modelling had showed that if there is a devaluation it will have little effect on the government’s revenue while it will lead to an escalation of inflation and demand from labour unions.
The Finance Minister said there will not be any cutting of employment in the public service. He also insisted government will continuing paying pensions and gratuity and making the social sector grant.
The Spotlight on the Economy comes one week before the presentation of the 2021 fiscal package and Imbert said the economy is reeling from the fallout of COVID-19.