Turks and Caicos Islands - Cautiously optimistic is how Chief Financial Officer, Hugh McGarel-Groves described his overview of the improving TCI Government fiscal position, on the publication of the second quarter financial statement, Tues, 13 Dec 2011.

The first quarter’s results showed good progress in putting the TCIG’s public finances on track to achieve a fiscal surplus in the financial year ending March 2013.   The main reason for further optimism in the half year results was a 34% rise above the same period last year in Government revenues to $80.7m (up 3% from the same period last year).

Accommodation tax continues to perform well above last year and budget for the year so far with receipts of $17.7m, $4.38m (32.9%) up on last year and $3.5m (24.8%) up on budget.  The revised forecasts for the remainder of the financial year anticipate an overall 25% increase above the previous year and 15% increase above budget, which is in line with advance bookings noted by hoteliers within the islands.

However, import duty was the main revenue source for the year to date with receipts of $20.9 million slightly ahead of last year, but down $2.2m (9.5) against the optimistic budget of $23.1m, whilst Customs Processing Fees of $5.4m were in line with the budget.

The second quarter was however met with many challenges particularly in the area of expenditures which were $9.5m (11%) above budget, mainly due to the unbudgeted historic liability payments that had to be made.

At the end of September 2011 the net of revenue and expenditure showed a cumulative deficit of $14.9m, doubling the predicted budgeted deficit of $7.3m; this is a significant reduction from the $35.3m deficit figure at the same stage in 2010.

This increase in the half year deficit was principally caused by the Government settling a total $8.2m of mostly unbudgeted historic liabilities including:  Utilities & Infrastructure $5.2m, Medical $1.7m, Office Supplies $0.6m, Professional Fees $0.3m and Travel $0.3m.

It was in order to mitigate any further escalation in the deficit that led to the budget measures announced in November, which introduced a number of tax rises from 01 Dec. These tax rises will help ensure the Government is back on track to achieve its objective of a financial surplus in the year ending Mar 2013, by reducing the potential $35m deficit this year to under $30m and improving next year’s forecast by $16m.  Achievement of this surplus in 2012/2013 will also depend, amongst other factors, on keeping the public service reform program on schedule.

Hugh McGarel-Groves, Chief Financial Officer, TCIG, said: “The detailed results from the second quarter of this financial year reveal that there are real reasons for cautious optimism about the Government’s financial position, despite some setbacks on  unbudgeted historic liabilities, as we work towards the milestones of providing a stable economic environment and reaching a financial surplus next year.

“Further, we can have improved confidence in our financial data due to our commitment to achieve reliable financial reporting. New measures have been put in place to track the monitoring of both revenue and expenditure programs through individual monthly meetings with Ministries and departments, supported by improvements to the reporting system to ensure more accurate and timely financial information being available.”