Government's finances are in the trash right about now; due to COVID 19, revenue collection is about half of what it used to be - and government is borrowing to pay its bills, and its public officers.
A circular which went out yesterday from the Ministry of Finance shows how acute it is.
Circular number 6 of 2020, dated May 19th warns public officers about a reduction in their monthly budget. It says, quote, "we are faced with the need to further curtail recurrent expenditure...Effective June first until further notice de-reservation of funds, except for personal emoluments will be reduced from 1/12th to 1/20th of the approved estimates." Now that probably just sounds like bureaucratese so we asked the Financial secretary via telephone what it means in real terms, and what it is indicative of for government's finances generally.
He said this "cut to the bone" basically means that the days of Folgers Coffee and Coffee Mate in government offices are done! From now on, it's bring your own Nescafe, with Klim!:...
Joe Waight, Financial Secretary
"Actually it's an attempt really to try to squeeze where we can to generate some savings and savings is not the correct, its more deficit reduction maybe the correct term, because simply we do not have. The revenue has collapse. A good day we may get in about 50% maybe little lower, but we really have to trim our sales to meet and back of the envelope we'd lucky to get 60 million dollars savings if we sustain, but even within those lines there are certain things that can't compress very much including say supplies to medical supplies that we are buying, some subventions we can't touch like to say the hospitals. You know there are some subventions to the education system which we have to be very careful how we manage and then the big items like street lighting and things that are almost a given, but I am confident that the people within the public service, the finance managers and the CEOs who manage their budgets are sees with how serious the problem is."
Jules Vasquez, reporter
"Is there a real world example you can sight of something that will have to stop as a consequence of this cut?"
Joe Waight, Financial Secretary
"Purchases of basic supplies. Over the years some things have crept in, beverages, coffee and all of that, uniforms for staff - things like that will be easy things to give up."
Jules Vasquez, reporter
"One has a concern that things may be starting to reach a tipping point or a critical point insofar as we've seen what Tropic Air has done - 220 employees. There are rumors that Maya Island may be force to do the same. We know that the government is reaching a point where it will have to at some point start to look at its wage bill and start to see if it can make trimmings there. Are we reaching a critical juncture or a tipping point in finances both public and private where without an immediate infusion and a sustain infusion we just won't be able to hold it together?"
Joe Waight, Financial Secretary
"We can borrow, yes we will do what we can, but again, we don't want to go a point where we go into an irreversible situation, so we will have to trim our sales more and soon."
Jules Vasquez, reporter
"And that includes wages?"
Joe Waight, Financial Secretary
"Yes, yes. Now how soon is soon, we'll try to hold off as long as possible, but it is coming."
It's a grim prognosis, and we asked the Fin-Sec if there is any prospect of improvement on the horizon. He said they are waiting on tourism, which may be a vain hope:
Jules Vasquez, reporter
"They always say every problem has a beginning, a middle and an end. We are yet at the beginning, are you seeing the middle and the end anywhere on the horizon?"
Joe Waight, Financial Secretary
"Not really, because we really don't know when the economy will start to rebound, all depends on tourism and that's a big open question. I don't think until there is a vaccine people would be wanting to travel and even if they want to travel probably to take a vacation, I don't know if people have the money to take a vacation anymore. You see the unemployment figures; you see the devastation to the economies in the US and in Canada where we get most of our tourism from. I don't think that anybody will take a vacation anytime soon."
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