Government is blaming a shortfall in revenue for the delay in the payment of salaries to public servants last month.
Prime Minister and Minister of Finance, Gaston Browne, told legislators that traditionally September and October “are very difficult revenue months” for the government.
“I am told that for September, all but $6 million of revenue would have been covered, or at least monies to pay wages and salaries had been covered,” he said, adding that his administration had just given instructions “to transfer another six million dollars from a CIP Fund…in order to ensure that the remaining public servants are paid.
“But the reality is there has been a shortfall in the revenue versus expenditure and we have this structural problem Mr. Speaker in that two items of expenditure, salaries and wages and debt repayment, account for 110 per cent of all revenues”.
Browne told legislators that the situation is not unique to his administration, but a recurring problem for successive governments for years.
He said the government has turned to the CIP (Citizenship for Investment Programme) to relief the shortfall in salary payments.
Under the CIP, foreign investors are granted citizenship of the island.in return for making a significant contribution to the socio-economic development of the country.
“So it is really the CIP that is keeping us afloat and again today we just had to transfer a couple million US dollars from CIP account….in order to cover salaries and wages,” Browne said.
“But the reason why the salaries and wages may have been paid a day or two late for some individuals is because there was a shortfall in revenue and we may have a similar situation in October. But, whenever that arises we may have other funds to cover payments,” Browne added.
Prime Minister Browne also dismissed a statement by an opposition legislator that the government’s decision to abolish the income tax could have contributed to the situation.
“In fact what the evidence would have shown is that whenever we had personal income tax the rate of growth would have slowed. So if you took out for example the revenue or the years leading up to Cricket World Cup where you had exceptional growth, you would recognise that generally speaking the (Antigua and Barbuda) Labour Party years without income take, the economy grew at a faster rate.
“So what you felt that we may have lost in terms of collecting direct taxes, we would have collected indirect taxes and that is helping to fuel stronger growth because disposal incomes are stronger, people could spend more so that consumption itself would have increased,” Browne said, adding “that’s why people could buy more cars”.