XIII. FISCAL PROJECTION FOR 2004

i. Background

184. The budget for the fiscal year 2004 lays considerable emphasis, like the previous budgets, on poverty reduction. The social sectors that are deemed the most important sectors of the economy are given the highest priority in terms of resource allocations. Furthermore, these budget estimates are based on certain assumptions, principal among them, is the 6% real GDP growth rate, improvement in revenue collections and enforcement, expansions in recurrent expenditure due to high debt service payments and an inflation indexed wage adjustment which eventually results to a projected level of deficit of about 11.6% of GDP.

ii. Revenue

185. The 2004 budget estimates total revenue and grants at D2581.55 million, which is about 24% of GDP. Hence, total revenues and grants are projected to grow by about 38% from the 2003 approved budget of D1.87 billion to D2.58 billion in 2004. This significant growth in revenues is needed to ease the growing fiscal pressures emanating from expenditures that are non-discretionary in nature. Of this amount, total domestic revenue is estimated at D2171.25 million or about 20% of GDP.

186. Direct and Indirect Taxes account for D1937.7million or 18.5% of GDP. This is further broken down into taxes on Income, profits and capital gains of D543.7 million (21% of total domestic revenue), Domestic Taxes on Goods and Services of D765.2 million (30% of total domestic receipts) and Tax on International Trade of D606.9m (about 24% of total domestic revenues). With the new classification, Non-Tax revenue is estimated at D233.4 million (1.98% of GDP) and Grants are estimated at D410.3 million which is about 4% of GDP of which HIPC receipts are estimated at D169.4 million.

iii. Total Expenditure

Mr. Speaker,

187. The total expenditure for 2004 is estimated at D3.8 billion, and this represents an increase of about 31% over the approved total budget of D2.9 billion in 2003. A broad analysis of overall expenditure shows that recurrent expenditure is D2699.8 million and development expenditure for the coming fiscal year is estimated at D1638.19 million. These estimates include expenditure from HIPC funds totaling to D169.4 million. These are monies that were to be paid by the country for its debt service but, thanks to the debt relief provided by donors, are to be utilized by Government for poverty-reducing expenditures only.

iv. Recurrent expenditure

188. Recurrent expenditure is estimated at D2201.5 million for the 2004 fiscal year, which is a 29% rise over the 2003 recurrent budget of D1705.7 million. Interest payments on both external and domestic debt amounts to D994.7 million, personnel emoluments constitute D464.5 million, and Other Charges account for D736.26 million, of which purchases of goods and services is D450.58 million and current transfer is estimated at D285.87 million. It can be observed that debt service, as manifested in huge interest payments, has been, over the past few years, the greatest source of fiscal pressures on the national budget. Consequently, government's priority expenditure has been significantly affected by debt service payments.

v. Development Expenditure

189. The Development expenditure figure of D1637.79 million is an expansion of about 34.5% from the 2003 amount of D1217.8m. The composition of the development budget is made up of a grant element of D240.9 million representing 14.7% of the total expenditure. Similarly, loan financing account for D1.17 billion or 71.8%, HIPC constitutes D100 million, and The Gambia Local Fund (GLF) account for D120.3 million.

190. The composition of the development budget highlights the active role played by our development partners in addressing the socio-economic needs of our people. Once again, we are appreciative of all donor efforts towards our nation-building initiatives.

-end.