2021 budget is cut by more than R1 billion during Mid Year review
September 08, 2021
The Government has made a savings of more than R1 billion for the first six months of the year.
Presenting the 2021 Mid-Year Economic and Fiscal Outlook, yesterday afternoon, before the National Assembly, the Minister for Finance, Economic Planning and Trade, Naadir Hassan, explained, that the government has spent 28% less than initially projected from the 2021 Budget.
“It is the first time that the Government is presenting a mid-year budget review, where savings of that size have been accumulated. This is a great accomplishment.”
In the National Assembly yesterday, Minister Hassan said the total reduction in the budget is R1,429,423,553.55.
However, the budget cut being presented to the National Assembly amounts to R1,125,511,764.72, because SR303,911,788.83 will be reallocated through a supplementary budget.
The reduction in expenditure is mainly because of delays in the implementation of capital projects, delays in recruitments, and restructuring in the public service.
The savings has allowed the Government to reduce its primary fiscal balance for this year, from 11% to 7.6%.
It has also allowed the Government to reduce its primary fiscal deficit from 10.5% initially projected, to 2.7% GDP.
This means the Government has collected more revenue than projected while its expenditure has gone down further than anticipated.
“These good budget performances are due primarily to the decisive decisions the Government took earlier this year to start the vaccination program against the COVID-19 pandemic and to re-open our borders in March.”
The arrival of tourist has been the number one factor in the turn around of the economic and financial performance of the country.
Growth in the sector, has accelerated the recovery of other related economic activities and thus the Government has been able to collect more taxes and foreign exchange receipts have also gone up.
This has ensured the appreciation of the Seychelles Rupee against the other currencies.
It should be noted, that the country's debt situation has also improved. At the end of June 2021, Government's debt stood at 80.7% GDP, compared to 100.8% at the end of December 2020. This represents a 20% decrease in less than a year.
Minister Hassan, while welcoming the reduction in Government expenditure, has still warned that the road to recovery is still mired in risks.
“The recovery is happening, but it is slow and we still have a long way to go. The Government is doing its part by cutting down on expenditure and reducing wastage, where necessary. It is showing that it can do more with less. I am calling on everyone to also do their part on this long road to economic recovery.”
Click on the video below to listen to Minister Hassan's full statement, and the official Mid-Year Economic & Fiscal Outlook 2021 Document.