Although the government is only in the second quarter of fiscal year 2011, based on current revenue and spending trends, “we are projecting a deficit of $12 million in the General Fund if we stay at the current spending and revenue levels,” Secretary of Finance Alfred Alfred Jr. said Thursday.
He issued a letter to all government departments and agencies late last month advising them that spending for travel and office supplies will be put on hold. The government’s annual budget is $129 million.
The General Fund is the government’s main account from locally generated revenue, ranging from taxes and fishing fees to income from its ship registry and aid from Taiwan.
A businessman at Wednesday’s Chamber of Commerce meeting questioned why the government was not implementing spending cuts as recommended by a panel that issued a report to cabinet 15 months ago on how to reduce costs to government. “There is a need to push expenditure reform, which is dead in the water,” said businessman Ben Chutaro, who chaired the Comprehensive Adjustment Program panel that issued the report with proposed spending cuts.
Four months into the fiscal year and the government has a more than $3 million deficit in the General Fund, Alfred said. This could be a “paper” deficit, since first quarter (October-December) revenue is credited to the previous fiscal year, he said.
But the financial trends seen to date have prompted spending control measures to be put in place. This is the earliest halt to spending announced by government, which routinely begins putting the brakes on spending one or two months prior to the end of the fiscal year on September 30.
After February, the ministry will do another review of revenue and spending to assess the situation, he said.
Alfred, who took over as secretary of Finance last month, said he is keen to begin implementing recommendations of the Comprehensive Adjustment Program that provided government a list of more than a dozen options for reducing spending, from trimming payroll to cutting back subsidies.
