Budget Surplus vs Carry-Forward? Let’s tell the truth
Let us not deceive the people. This is terrible for our country. It is always a good thing to tell the people the truth. As economists there is nothing wrong with making projections based on certain assumptions.
And those assumptions do not materialize then outcome might be different from the projection.
The fact that you are carrying money forward because the IMF’s budget support came at the end of the fiscal year does not mean that you had a budget surplus. We all know that to have a budget surplus means that you collected more revenue than you originally projected. For example, if you projected, at the beginning of the fiscal year, that you would raise US$526 million but at the end of the year you actually raise US$500 million, regardless of the reason and regardless of whether you spend everything you collected, there is a shortfall in the budget.
Again, you cannot revise the estimate downwards and call the difference a surplus. There are always reasons why folks do not meet their estimates and so one cannot say that because of the COVID-19 we revised the projection downwards and then call any excess over the revised projections (in this case there is not excess over projected) a budget surplus. If that were the standard, then no one would ever experience a shortfall because then all one needs to do is revise the projection downward and then claim that you beat your estimates and hence a surplus.
But in this case, the actual revenue (US$507 million) did not even beat the revised, reduced estimate (US$518 million). How can you collect US$507 million when you projected that you would collect US$518 million and then call that a surplus? What world are we operating in?
What we experienced is that the IMF decided to give us some money (US$50 million) under the Rapid Credit Facility (RCF) and this money came late in June when the budget year was about to end (June 30) and there was no way to spend everything and so we will be carrying some of it forward, under the watchful eyes of the IMF. This is not a surplus. It is dishonesty to call this a surplus. We could not even meet our revised projection (US$518) which was substantially lower than the originally projection of US$526 Million.
Remember that though we might be carrying some of the IMF’s loan forward, many hospitals are with fuel and medicines and many schools are without supplies and many ministries did not operate; employees only collected harmonized paychecks.
Let’s be honest for once!