Government Projects Return to Single Digit Inflation
Minister of Finance and Planning, Dr. Omar Davies has said that the Government is projecting an inflation rate of nine per cent for fiscal year 2004/05. The preliminary inflation outturn for the previous fiscal year was 16.7 per cent, more than twice the projected target of seven per cent for the period.
Meanwhile, the Finance Minister also projected lower inflation targets of seven per cent for fiscal year 2005/06 and six per cent for fiscal year 2006/07. He made the announcement on Thursday (April 15) while opening the 2004/05 Budget Debate at Gordon House.
Dr. Davies also projected the Real Gross Domestic Product (GDP) for fiscal year 2004/05 at 2.5 per cent. A similar projection has been made for 2005/06 while the GDP projection for 2006/07 is three per cent. Last fiscal year's (2003/04) target was 2.7 per cent with preliminary outturn at 2.2 per cent.
The Net International Reserves (NIR) has been projected at US$1.3 billion for the 2004/05 and at US$1.26 billion for fiscal years 2005/06 and 2006/07. Last year's fiscal target was set at US$1.3 billion with preliminary outturn at $1.56 billion.
For the current fiscal year a budget deficit of between three and four per cent has been projected while for the following fiscal year (2005/06) the government is projecting a balanced budget. The budget deficit for the last fiscal year was 5.8 per cent, falling within the government's projection of between five and six per cent.
Discussing plans to eliminate the budget deficit in fiscal year 2005/06, Dr. Davies said, "the achievements of the fiscal year have given creditability to these targets and should provide creditors with the assurance that our target of eliminating the deficit in the next fiscal year 2005/06 will be met."
Turning to the social targets, Dr. Davies said that the Government was committed to developing human resources and to raise the standards of living. "The reality is that for a very long time in the future, we need to support expenditure in providing a Social Safety Net and investing in the social services but to convince creditors, domestic and foreign, that the money they lend to us will be repaid," he said.
Meanwhile, he said that in terms of the social objective, the government would be working with its international development partners in producing a medium-term socio-economic policy framework anchored on the macroeconomic targets.
He disclosed that a draft document of these targets would be made available to the public for scrutiny. "This development represents a continuation of our effort to ensure that our performance is monitored against the targets which have been established, not only in the economic sectors but in the social sectors," he said.
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