It’s National Budget day today and for the people of the country, they are now awaiting the announcement at 11am on what the government has in store for them and how it will affect their daily lives.
The National Budget will be delivered by the Acting Finance Minister Aiyaz Sayed-Khaiyum and will focus on two major issues as in any budget.
They are revenue and expenditure. The government’s main revenue is through taxes that people pay, so that is where we all come into the picture in financing the nation’s budget while expenditure includes the allocations given to all the government ministries and departments to carry out services in 2011.
The government’s vision, focus and initiatives for next year will be known today where it will reveal its revenue measures and projected income and at the same time announce the projected expenditure for the different ministries.
In this year’s budget there were projections to get $424 million through direct taxes and $840 million through indirect taxes.
Operating expenditure was projected at $1.32 billion while capital expenditure got $325 million.
The government has maintained that it wants to reduce the operating expenditure and increase capital expenditure because the capital works will result in more new and improved infrastructure and facilities for the people.
Debt repayments budgeted in 2010 was $276.8 million.
There is always an everlasting battle for any government to grow the economy that would benefit the nation as a whole, increase exports, reduce the import bill, reduce civil service costs, focus on the delivery of services to the people of the country and raising foreign reserves.
It is always a balancing act and not everyone is pleased after a budget announcement.
The balancing act would be to introduce or continue with government policies that will improve the standard of living of the people and at the same time have attractive policies and incentives for businesspeople.
At the same time the issue of civil service efficiency and delivery of services to the people through different ministries is important as any budget is as good as the service delivery.
The focus will also be on key industries that can deliver revenue, investments, employment and overall growth.
A lot has also been said about assistance to people but any government needs to really weigh up the issue on the type and level of targeted assistance, as creating a continued handout mentality will result in a dependent group always relying on government handouts.
No doubt a sector of the community needs to be assisted but initiatives need to be set up to make them self sufficient as much as possible.
The focus of the 2011 National Budget is expected to be on structural reforms.
One of these will be the Civil Service Reform which is already underway.
Permanent Secretary for the Public Service Commission Parmesh Chand said the current size of the civil service stands at just over 27,000 and work is in progress to determine the right size of the civil service.
Chand said the focus is now on the larger ministries and the exercise is expected to take three months, with the target for completion being 28th February next year.
There have been high hopes that the Land Reform which allows landowners to register their piece of land into a Land Bank system to be managed by the government will boost agriculture production and strengthen the foundations of economic growth and prosperity.
Land is an important component and due to the expiry of ALTA leases since 1997 and the non-renewal of leases over a period of time, agriculture production, mainly sugar, has been on a downward trend.
With the land reform, land which is not tied up with any lease arrangement can be put into the market and the landowners are expected to get higher returns while the tenants will have access and certainty.
This is also expected to greatly boost investment and facilitate commercial agriculture.
The greater aim is also to increase exports and reduce our imports.
Looking at production and export levels, the sugar industry has seen continued reduction in sugar production since the early 1990’s.
In the year 1994, Fiji produced 514,000 tonnes of sugar. Last year the sugar production level stood at 168,000 tonnes and the Reserve Bank of Fiji has forecast 2010 to end at about 137,000 tonnes of sugar produced.
Sugar exports have also been decreasing.
In 1996, sugar brought in $302 million through exports while last year sugar export earnings stood at $155 million.
The government has now stepped in to ensure that there is increased sugar production and mill efficiencies.
In recent years, the Fiji Sugar Corporation has recorded huge losses due to mill inefficiencies which have been a result of low investment in mills and rail capacity.
The sugar mill upgrade through a $86 million loan from the EXIM Bank of India has not worked well due to substandard equipment, the non-compatibility of equipment brought in with existing machinery and poor workmanship.
The mill breakdowns have continued this year with the Prime Minister raising serious concerns about the state of our mills.
The performance of the sugar industry is mirrored by the poor financial position of FSC.
The company has required annual government guarantees since 2001 to undertake borrowings to meet its working capital requirements.
The government granted a guarantee of $120 million this year to assist FSC in its ongoing operations and cane payments.
With all this done, the government will now have to focus on actions that can assist the industry to bounce back.
There are high hopes for gold production as output has more than doubled up to August this year.
Increased capital investments have assisted this notable upturn.
Higher international gold prices also continue to boost export performance in the sector.
In addition, other sectors particularly fish and timber are also faring well with higher annual export receipts.
Expectations are high in all these areas.
However, a lot of work needs to be done to achieve positive and higher results.
At the same time, people are reminded that with every expenditure allocation made later today, be it favourable or otherwise, the government has to look for revenue to fund the allocation.
With that in mind the tax measures are looked at.
Consumer Council of Fiji is hopeful that the government does not increase taxes next year as this will affect low income earners.
Chief Executive Officer Premila Kumar said the low income earners are already struggling and increasing taxes will have a direct effect on them.
Kumar said they have seen some of the changes that government intends to bring adding that they want a budget that reduces the country’s inflation rate.
The Fiji Retailers Association also hopes that duty free regions are set up in the capital city and other areas for the benefit of the tourists.
They are also hoping for attractive initiatives for the business community.
However, President of the Association Himmat Lodhia stressed that they would not like to see an increase in VAT as it may undermine consumer spending.
One of the leading businesspeople and Flour Mills of Fiji Chairman Hari Punja hopes there is consistency and protection of the local manufacturers.
However, he agrees that it is a major balancing act.
Stay with Fijivillage as we bring you hourly analysis of the 2011 National Budget throughout today.
The price increases or decreases, the tax measures that apply to you and how the allocations affect you will be brought to you by Fijivillage.
Story By: Vijay Narayan
