An Overview of Financial Statement Forecasts
Madam Speaker, let me now turn to the financial statement forecasts that are included in the Annual Plan and Estimates. I will focus on the Core Government figures.
The financial statements in the Annual Plan and Estimates start at page 298.
The key measure of Government’s performance is the difference between its Operating Revenues and Operating Expenses. A surplus exists if Operating Revenues exceed Operating Expenses.
The financial statements indicate a forecast surplus of $32.5 million for the 2006/7 year. This surplus is forecast even after budgeting $2.0 million of Extraordinary Expenditure to provide Hurricane Ivan relief assistance.
The surplus is calculated by subtracting total Operating Expenses of $395.0 million, $12.6 million of Interest and financing expenses and $2.0 million of Extraordinary Items from the forecast Operating Revenue of $442.1 million.
Overall, Operating Revenue is forecast to be approximately 16.3% higher than the 2005/6 forecast, while total Operating Expenses are forecasted to increase to $395.0 million, from $366.7 million. New revenue measures of $23.3 million account for 38% of the increase over the revenue forecast for 2005/6. This increase of $23.3 million of new revenue measures affects the following income classifications: domestic levies – $12.0 million; property levies – $7.2 million; and sale of goods and services – $4.1 million.
Total Operating Expenditure shows an increase of 8% over the 2005/6 forecast. The cost of personnel, supplies and consumables accounts for approximately 72% of total Operating Expenses. During 2006/7, this cost is expected to increase by 9% when compared to the 2005/6 forecast. This 9% movement is consistent with the latest award of a 4.8% cost of living increase paid to Civil Servants and, the general increase in price levels.
Included in the total Operating Expenses figure of $395.0 million is the net loss of Statutory Authorities and Government Companies. This net loss is forecast to be $0.8 million, a significant reduction from the $4.2 million estimated for the 2005/6 financial year. Such an improvement is a reflection of the Government’s commitment to ensuring that, in aggregate, the public authority sector achieves a break-even position at the earliest possible time.
Madam Speaker, in addition to the figures I have already mentioned, the operating forecasts include $2.0 million of Extraordinary Expenditures. This item relates to Hurricane Ivan, and consists of housing and relief assistance to the needy. It was not expected that Hurricane Ivan-related expenses would have continued into 2006/7. Nonetheless, Government must be responsive to the needs of the Islands. It is anticipated that 2006/7 will be the last year for Hurricane Ivan-related expenses to appear in Government’s annual budget.
The 2006/7 Strategic Policy Statement sets a surplus of $24.5 million as a target. The financial statements in the Annual Plan and Estimates indicate that the forecast surplus for the 2006/7 financial year is $32.5 million: it therefore exceeds the target set in the Strategic Policy Statement.
The Cash Flow Statement indicates $115.1 million will be used for the purchase or development of Executive Assets and $14.3 million for investments into Statutory Authorities and Government Companies is forecast to occur during the 2006/7 year.