THE economy is “still in a slump,” but key indicators are “improving,” said Gov. Juan N. Babauta.
Despite this, Babauta stressed in a briefing on the CNMI’s financial profile yesterday that recovery is going to be a “slow process.”
Lt. Gov. Diego T. Benavente said the administration is now geared towards a more reduced government spending and an improved tax collection to support efforts in revitalizing the islands’ moribund economy.
According to the Department of Finance, the commonwealth government should expect a “favorable projection of 10 percent” in economic performance for Fiscal Year 2003.
Babauta said that there is already an assured increase in the collection of Business Gross Revenue Tax, Excise Tax, and hospital collections in the $213.725 million projected revenue.
Babauta said the government will institute measures that will cut back “cost-related expenses” at the Department of Public Health. At the same time, an aggressive and increased collection of debts owed to the Commonwealth Health Center will be implemented.
As of May 31, the “current operating deficit” of the CNMI government is pegged at $20 million.
Of the figure, Public Health accounts for the bulk with a $9.31 million deficit.
The Department of Public Safety’s overtime is costing the administration some $5.66 million.
The government is also falling short of some $5.21 million in “utilities payment.”
Babauta said that his administration’s “bone of contention” right now is how to figure out whether the CNMI government has been paying water, electric and other utilities “unnecessarily.”
The governor said that CNMI’s cumulative deficit stands at $69.18 million, based on data covering Fiscal Year 2001.
Babauta said the figure was significantly reduced by his predecessor, the Tenorio administration. In FY 1998, the cumulative deficit was $80.60 million.
Benavente said the administration is now “attempting” to “zero-out” the $20 million current deficit from January to May.
Benavente supported Babauta’s view that there is a need to “prevent” the $20 million current deficit to be “factored in” to the cumulative deficit.
“We are working to place controls, such as cost-cutting directives, to prevent it to be factored in,” Benavente said.
There will also be no “anticipated increase” in revenue for the garment industry in FY 2003, based on the government’s revenue projection.
However, acting Finance Secretary Esther Ada said more economic activities are expected in the next fiscal year, which will primarily come from several capital improvement projects.
Ada also said that the recovery of Japan from last year’s recession corresponds to a “10-percent” increase in Japanese tourists to the CNMI.
Babauta said that he and Benavente, upon assuming office this year, immediately instituted “controls of select expenditures” on various departments and agencies.
This resulted in significant reductions on expenditures, according to him.
Off-island travels were significantly reduced by the administration to 22.5 percent.
A 17-percent decrease in travel expenditure covering February to May this year was noted, compared to the same period last year.
Vehicle rentals by the government registered a 7.5 percent decrease.
The administration was also able to reduce expenses for “professional services” by 14 percent.
Overtime work was likewise reduced by 26 percent.
The administration is now eyeing a “very substantial decrease” in office rentals and communication expenses.
The government, however still stands to pay millions of dollars in “other liabilities” or past dues to other agencies.
The CNMI government owes the Commonwealth Utilities Corp. some $10.87 million; The Retirement Fund, some $54.75 million in contributions and another $10.19 million in “quarterly allotments.”
The government also has to pay various vendors some $7.2 million.
The local government was able to generate $15.2 million “in excess” as drawdown from Covenant Section 702-funded CIPs as of March 31 this year.
The administration said it is a “substantial savings.”
“This is a result of the good monitoring effort of concerned individuals,” Babauta said.
He lauded his special assistant for CIP Project, Charles Jordan; DOF, the Commonwealth Ports Authority and CUC for the coordinated efforts.
Several multi-million dollar projects are slated for construction, while some are on-going.
These include the $17 million adult correctional facility, the $5.5 million Public Health Building & Dialysis Center, the $13.5 million Landfill/Transfer Station Projects, the $6 million Garapan Revitalization project, the $4 million American Memorial Park Project and the $4.5 million Rota Courthouse and Convention Center.
Rota CIPs however have been snagged apparently due to disagreements between the mayor and the Rota Delegation, according to the Department of Public Works.
