Preliminary 2010 September Financial Results

PRESS RELEASE 29/10/10GH

Preliminary 2010 September Financial Results

The Ministry of Finance today released the preliminary Solomon Island Government (SIG) financial results for YTD September 2010. The September 2010 financial information is unaudited and the reported figures are the best currently available and may change marginally as more information comes to hand. Care needs to be taken when comparing monthly or cumulative data as revenues and expenses vary from month-to-month.

Summary of September Year to date 2010 Financial Results

Original Annual
Budget
$m Adjusted Annual Budget (incl Reservation)
$m YTD
Budget Adjusted
(Sept)
$m
YTD Actual
September
$m
Variance
Budget/Actual
$m
Revenue 1,744.0 1,744.0 1,259.5 1,243.2 -16.3
Expenses 1,808.3 1,683.2 1,274.0 1,246.9 -27.1
Budget surplus(deficit) -64.30 -60.80 -14.5 -3.7

Note: all figures reported exclude Budget Support (NZAID & AUSAID - Education & AUSAID-Health and ADB)

SIG recorded a deficit of $3.7m for September YTD 2010 against an estimated deficit of $14.5m. Expenditure was $1,246.9m for this period, which exceeded Revenue of $1,243.2m.
- Revenue collection was $1,243.2m against the YTD budget estimate of $1,259.5m. This represents a $16.3m shortfall in YTD revenue collection. The short fall is recorded mainly against other Ministries revenues and SIG donor consolidated revenues.
- Donor Consolidated development receipts were $55.5m YTD, with the major portion of this representing ROC grants of $39.5m and $16.8m NZAID development grant for the Education Recovery and Rehabilitation program. This NZAID grant is separate from its Budget support component.
- Actual expenditure was $1,246.9m against pro-rata estimate of $1,274.0m leading to an under budget spending of $27.1m. Expenditure included Standing and Special Imprests payments (advances) of $55.7m.
- Donor consolidated expenditure was $57.5m, comprising mainly RCDF payments. This also includes the disbursement of NZAID Development grant of $16.8m.
- The budgeted expenditure figures for September YTD results include an additional $10.9m in contingency warrants.
- YTD expenditure levels have been managed to offset shortfalls in YTD revenue amounts, but while the YTD result is better than expected, it still reflects a deficit situation.

Inland Revenue Division (IRD)
Collections for IRD YTD were $777.1m against budget estimate of $723.7m, $53.4m greater that budget. Major income for IRD were Goods Tax $289.7m, Personal Taxation (PAYE) $196.3m, Company Tax $177.6m , Sales Tax of $34.4m and Withholding Tax and others of $45.7m and $6.2m respectively.
Customs & Excise Division
Collection for Customs YTD was $338.5m against a budget of $316.8m, $21.7m greater than budget. Major collections were in the following areas:
1. Export Duty on logs/timber $161.5m with the month of September recording $21.8m Log revenues appears to fluctuate around a monthly figure of $16m-$20m levels
2. Excise Duty on tobacco, beer, spirits $71.2m
3. Import Duty $99.6m
4. Export Duty (excluding log/timber) $2.8m
5. Other $2.3m

Other Ministries
Collection from other Ministries for September YTD was $71.2m, against pro rata estimates of $158.9m. Foreign Fishing Licenses and fees represent $28.4m (or 39%) of the revenue collected, whilst $8.6m and $1.7m for Immigration and Land rents respectively.

Payroll Expenditure
Payroll expenditure YTD for September was $417.2m against pro rata estimate of $365.6m, an over budget spending of $51.6m. The YTD amount reflects the 7.5% COLA awarded at the beginning of the year.

Other Expenditure
Other Charges Expenditure for September YTD was $493.9m against adjusted estimates of $560.4m.This reflects under budget spending of $66. 5m. The 35% reservation on other charges expenditure was a major factor that drives the under spending. Areas of major expenditure are:
• National Debt Servicing- $60.09m
• Education Grants (SIG)-$53.2m, of which $34.9m is for Fee free Education.
• Provincial Grants -$26.2m
• Health Services Grant (SIG)- $22.3m
• Utilities -$56.3m
• Overseas training- $27.1m
• House Rent -$46.1m
• Office Rent - $10.8m
• Office Rent (Overseas Missions)-$1.4m
• Repair and upkeep of government buildings- $17.7m
• Overseas Travel MPs and Public Servants-$9.4m
• MP’s cost under National Parliament -$15.3m
• Fuel - $10.0m

SIG Development Expenditure
Expenditure for SIG funded Development Expenditure for Sept YTD was $140.7m against estimated budget of $221.5m. Major expenditure includes the Canberra Chancery $27.5m; Rural Livelihood payments of $30.8m; reforestation $10.3m; replacement of navigation equipment and airfield upgrades $11.6m; tourism related projects which include the new SICHE Tourism School $8.5m; SIG RCDF contribution of $5m; Census project $7.0m; road maintenance and provincial rehabilitation $4.7m; agriculture projects $9.5m; and $7.2m for mines and energy projects.

SIG Budget Support YTD
NZAID $47m received and $38.8m disbursed of which $18.8m was for school Fee Free grants mainly towards early childhood basic education sector.
AUSAID $29.4m received and $22.2m disbursed for Fee Free Education and $2.7m on school infrastructure Projects.
ADB $40m received and $31.3m disbursed as budgetary support to Ministry of Health ($9.8m), Ministry of Infrastructure ($13.9m) and Ministry of Education ($7.4m).

Fiscal Measures
The above information shows that there are significant financial challenges for the remainder of the 2010 financial year requiring close financial controls.

The figures and analyses are based on the best information currently available, and may be subject to change as more information comes to hand.

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