Two months into the fiscal year, Jamaica's fiscal deficit has topped $22 billion, an outcome that has already busted targets for the period, even though the finance ministry had more than doubled its projections in anticipation of a massive gap in operational funding than it saw a year ago.

And the primary surplus is showing equal signs of wear and tear at one-seventh the level it was in the 2008 period.

The ministry when it crafted its budget earlier this year knew that the fiscal deficit would have been huge, predicting a gap of $20 billion at the end of May, compared with the $9.6 billion deficit actually recorded at the same period in 2008.

But underperforming tax revenues at the outset has thrown the first two months even further off-track than Finance Minister Audley Shaw and his technocrats envisaged.

The treasury collected $39.3 billion in tax revenues, but that amount was short by $4.4 billion, moving to a $5.5-billion shortfall in overall revenue when fees, grants and capital inflows are taken into account.

The Government managed to offset some of the shortfall by slicing $3.4 billion from its spending plan over the period - the savings were generated substantially from reductions in capital projects, down $1.4 billion, and a $2 billion cut in loan servicing charges - but still overshot the mark by $2.1 billion.

Underperforming taxes

Instead of $63.3 billion in wages, interest payments on the debt and project fundings, Jamaica spent just under $60 billion.

The underperforming taxes were SCT on imports whose $1.86 billion of collections was $1.6 billion below target; and general consumption tax on locally bought goods and services which brought in $6.3 billion, compared with $7.4 billion of budgeted collections.

Notably, the only revenue stream to overperform was Jamaica's struggling bauxite sector which brought in $37.7 million in levy payments, or $17 billion more than the $20.6 million of inflows expected.

Still last year, the bauxite levy brought in $1 billion of revenue for Jamaica in the months of April and May, and negligible corporate income tax of about $200,000.

To help finance its income gap, Jamaica has so far borrowed $28.4 billion - a billion less than programmed - but has shelled out $15.4 billion to pay down existing debt.

The primary balance, though, in surplus at $1.45 billion at the end of May is at one-third its targeted level of $4.7 billion.

At last fiscal year end March 2009, the primary balance, which assesses the amount of financial coverage the Government has when debt-servicing charges are stripped from its accounts, was $50 billion. The target, however, was $80 billion.

The fiscal deficit, too, had ballooned out of control to $75 billion, compared with a target of $43 billion.

lavern.clarke@gleanerjm.com