BASSETERRE, ST. KITTS, DECEMBER 22nd, 2016 (PRESS SEC) — The Ministry of Finance has reported an Overall Surplus of EC$127.4 million for the 2015 Fiscal Year. Its report complies with international best practice, as it is based on the Economic Classification, which is the format that the Government has consistently been presenting the Financial Summary in since the year 2003.
Mrs. Hilary Hazel, the Financial Secretary in the Government of St. Kitts and Nevis, explains why the Ministry of Finance’s calculation differs from that of the National Audit Office, which shows an Overall Deficit of EC$38,504,886.
The Financial Secretary says that, “The main reason for the difference between the $38.5 million deficit that was reported by the National Audit Office and the Surplus of $127.4 million reported by the Ministry of Finance is a difference in classification methodology. The National Audit Office treats Principal Payments ($183.7 million) as expenditure whereas the Ministry of Finance, in accordance with international best practice using the Economic Classification, treats Principal Payments as Financing (a memo item). A reconciliation of the differences between the financial statements and the fiscal data for both the Recurrent and Capital Accounts is presented each year in Volume I of the Estimates.”
The Financial Secretary further notes that the reporting of an Overall Surplus for 2015 by the Ministry of Finance is consistent with what the International Monetary Fund (IMF) said in its 2016 Article IV Staff Report for St. Kitts and Nevis published in July 2016. The July 2016 IMF Staff Report states that, “The overall fiscal balance remained in surplus in 2015, at an estimated 5 percent of GDP.”
The Ministry of Finance confirms that it is not the first time that there have been differences in the reporting of the Overall Balance based on the methodology used by the Ministry and the National Audit Office.
Case in point: During the 2007 Budget Address under the previous administration, it was reported that there was an Overall Deficit of $51.8 million. However, the $51.8 million differed from the Deficit of $125.6 million reported by the National Audit Office.
The then-Prime Minister later explained the reason for the discrepancy on pages 38 and 39 of the 2008 Budget Address, which he presented to the National Assembly on Tuesday, December 11th, 2007.
Back then, the Prime Minister, who is now the leader of the Opposition, said: “Madame Speaker, the report that I am about to give on the fiscal performance of the Federal Government is based on data that is presented in the economic classification format. The amounts stated in my report will therefore differ somewhat from the figures that are reflected in the audited annual accounts for the year ended 31 December 2006. However, you would note that in Volume 3 of this year’s Estimates there is a detailed statement reconciling the differences between the audited annual accounts and the fiscal data prepared using the Economic Classification Format.”
Dr. Douglas continued on page 39 of the 2008 Budget Address: “While the accounts [as reported by the National Audit Office] that we have inherited from colonial times are effective in respect of financial controls, they are grossly inadequate in relation to…economic management generally.”
The then-Prime Minister added: “Moreover, if we were to disseminate information internationally based on the annual accounts as it stands, such information would not be useful in comparing the performance of our Federation with other countries of the world because the most prestigious international publications, including the Government Financial Statistics published by the IMF does not use the format of the annual accounts. The Ministry of Finance has bridged this gap by preparing financial statistics in accordance with international best practice and by using such statistics in support of fiscal policy decisions and economic management. Hence, it is these statistics that guide the allocation of resources and the budget system generally.”