The overall fiscal deficit: it's the financial bottom line for every sovereign nation and the experts insist, that figure must be kept below 3% of GDP. That's the international gold standard for a healthy and robust economy, and in the past 5 years, the government has missed or just ignored that target, running an overall deficit that went as high as 9% of GDP. But that was before the lean, cold days of austerity and hawk-like international monitoring.
This year, under pressure from the IMF, government committed that it would reign in the spiraling deficit to 3.6% of GDP. Well, last week when the IMF team made its regular visit, Prime Minister and minister of Finance Said Musa gave them the bad news: things change; the final deficit will be more like 5.6% of GDP. And what does government blame it on? Well, that catch all culprit: rising world fuel prices. Government told the IMF that it lost US$25 million in taxes from fuel when it had to absorb increases to keep the price for a gallon of gas close to $10.
And while those fuel losses are almost 1% of GDP alone, government also had to 'fess up to unbudgeted payments such as the kind being made to the International Bank of Miami on behalf of Glenn Godfrey's Intelco. Intelco may be shut down, but government is still paying for the intercom system that Intelco installed in public offices. On January third of 2006 that amounted to $676,944.60 that government had to pay in equivalent U.S. dollars to the International Bank of Miami on behalf of Intelco. Similar payments were made in June, July, August, September and November.
But those aren't that only extra-budgetary payments government has had to make. Legal fees also threw the deficit off target. Government's legal bills have been whopping! In the past year, payments to attorneys, mostly for the Prosser battles, have amounted to $5,261,000--all un-budgeted. Most of that money has gone to government's pricey Miami attorneys, the firm of Hunton and Williams, which has been paid $1.95 million from April to the end of December, 2005. Albert Fiadjoe, who is representing government at arbitration proceedings, also cashed in with charges of $230,000 spread out over November and December alone.
And on the slender upside, while there is significant deficit over-run, the IMF expressed satisfaction that over 3% economic growth has been maintained, even with massive cutbacks in public sector spending.
