There seems to be some confusion about where the money will be coming from to pay for the Budget, most especially the money to pay the hefty civil servant wage and salary increases and other ongoing expenses such as free education.
Budget expenditure is divided into operating expenditure and capital expenditure. The pay increases and other ongoing expenses are part of operating expenditure that will be covered by government revenue from tax, dividends and sale of some state-owned assets and other revenue sources.
Some of the pay increases will be returned to government as taxation on the higher civil servants' incomes and VAT from their likely increased spending.
Money will only be borrowed for capital works.
Some political parties have either not understood this or have deliberately made statements to mislead the public, labelling much of the budget as "election promises." Finance Ministry Permanent Secretary Filimone Waqabaca, however, has said that while "normal expectation from parties is that before elections, government will tend to incur higher deficit. They will now see that this budget did not go in that direction."
“These are part of our operation costs, and like all other operational expenses that government makes to keep its machines going, the wage increase and the free education policies are covered in our operating . The free education ($64.5m) and wage increase (more than $92 million) policies for 2014 amount to more than $146.5million.
In comparison, government has estimated to earn $2,175.2 million next year which is an increase from the revised revenue projected for 2013 of $1,976.9million. In 2012, actual operation revenue earned by government amounted to $1,859.4 million.
Waqabaca says they have done well compared to earlier projections. “Up to the end of September, in terms of out fiscal performance we see that we have a surplus of 0.8 per cent of GDP as opposed to our forecast by September which would have been around three per cent deficit. “Instead we have achieved 0.2 per cent surplus. Basically, this is due to good collection that we have in revenue, VAT and other components while we control our expenditure. He said they were maintaining fiscal management and will work towards macroeconomic medium targets such as lower debt levels and a balanced budget.
Read more at: http://fijilive.com/news/2013/11/no-loans-for-salaries-budget-promises-govt/55636.Fijilive