Annual Economic and Financial Review -December 2018

2018 Annual Economic and Financial Review

GRENADA

in current expenditure was weaker than that of current revenue, leading to the higher surplus on the current account. Current revenue grew by 7.3 per cent ($50.9m) to $751.0m, slightly lower than the rate of growth of 7.4 per cent in 2017. As a percentage of GDP, current revenue was unchanged at 23.0 per cent. Tax revenues amounted to $717.3m (22.0 per cent of GDP), exceeding the prior year’s level by approximately 7.1 per cent ($47.3m). Revenue from taxes on international trade and transactions rose by 9.1 per cent ($20.3m), primarily associated with growing receipts from import duties ($6.4m) and customs service charges ($5.7m). Receipts from taxes on domestic goods and services advanced by 4.5 per cent ($12.7m), primarily associated with an increase of $14.0m to $249.6m (7.7per cent of GDP) in Value-added Tax (VAT) receipts. Taxes on income and profits rose by 7.2 per cent ($10.1m), mainly as a result of increased collections from corporations ($7.1m) and the personal income tax category ($3.0m). Revenue from taxes on property grew by 17.3 per cent ($4.2m) to $28.5m. Non-tax revenue rose by 12.1 per cent ($3.6m) to $33.7m, reversing the contraction of 12.9 per cent recorded in 2017. Current grants amounted to $15.6m (0.5 per cent of GDP) in 2018, an increase of $1.7m over 2017.

Current expenditure expanded by 1.3 per cent ($7.9m) to $613.8m (18.8 per cent of GDP), a noted slowdown from the 7.2 per cent growth rate recorded in the previous year. There was a 14.5 per cent ($19.3m) increase in outlays on transfers and subsidies. Personal emoluments, which is the largest expenditure, rose by 3.0 per cent ($5.4m) to $273.1m as a result of the granting of 3.0 per cent salary increase and a one-time payment to public officers. On the contrary, outlays on goods and services fell by 3.3 per cent ($4.2m). Interest payments also declined by 18.6 per cent ($15.1m), benefiting from the conclusion of debt restructuring in 2017 that included interest rate adjustments. On the capital account, $73.8m (2.3 per cent of GDP) was recorded in capital grants, above the $64.2m (2.1 per cent of GDP) received in 2017. Capital expenditure totaled $89.7m (2.8 per cent of GDP), up from $80.6m (2.6 per cent of GDP) in 2017. The amount expensed on capital expenditure was approximately 30.0 per cent lower than the 2018 Budget Estimates mainly due to capacity constraints. Improved public financial management, evidenced by higher primary surpluses along with successful debt restructuring,

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