Cashflow problem caused by finance mismatch: Kuma

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Minister of Finance and Treasury Harry Kuma
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By EDDIE OSIFELO

MINISTER of Finance and Treasury, Harry Kuma has blamed the current cash flow challenges by the Government on domestic revenue timing mismatch with general SIG expenditure.

Kuma explained this when he responded to the question asked by Leader of Opposition Matthew Wale in Parliament yesterday.

He said the Government hopes that this mis-match will ease in the third and four quarter.

Furthermore, Kuma said with the implementation of new revenue measures introduced in the 2021 Budget together with stringent efforts in overall SIG agencies revenue collection, the Government remain very hopeful and positive that total revenue collections will improve in the months ahead.

The Government has passed the $3.9 billion budget in late April this year and started the execution of the $2.7 billion Recurrent Budget from 1st May.

There are $938 million in the Development Expenditure and $258.5 million in the Budget Support Expenditure.

Kuma said as of 30th May, SIG Year to Date expenditure was recorded at $1,166.9 million.

He said this was under budget spend by $427.7 million.

Kuma said this is due mainly to Recurrent Expenditure was under spend at $25.8 million, debt service was under spend at $6.6 million, and Development Expenditure was recorded at $13.6 million, or Year to Date pro rata under spend at $365.1 million.

Furthermore, the Finance Minister said Year to Date revenue at 31st May, on the other hand, was below budget by $41.8 million despite above collection by Customs and Exercise at $16.9 million and above collection by Inland Revenue Division at $7.2 million.

Kuma said the overall under collection at 31st May, is mainly due to other SIG Ministries revenue collection, which below budget by $65.9 million.

He said bulk of this under collection was recorded under the Ministry of Fisheries, which $53.3 million.

“This under collection by Fisheries is due mainly to seasonal factor as majority of Fisheries dues normally receive towards the end of the fourth quarter,” he added.

Earliear in the leaked email by  Bruce Phillips, Accountant General  Ministry of Finance and Treasury said presently Treasury has over $200 million of payments that it is not able to pay due to very limited cash flow. 

He said this situation has largely been brought about due to the significant 3rd quarter payments due in the first two weeks of July.

“The 3rd quarter payments relate broadly to provincial health funding, provincial administration and salary grants, education grants, parliamentary entitlements, housing rentals, other allowances and MRD constituency payments. 

“Naturally donor funded payments are NOT impacted nor are COVID related payments as these are funded separately from SIG,” he said.

Phillips said MoFT is working closely with supportive donors and the local debt market to address the current constraints.

“We anticipate agreeing terms for the use of almost $100m of JICA funding in the coming days to assist with the current funding shortfall,” he said.

 Phillip said Ministries are advised that there will not be  a quick fix to the current situation and they are requested to PROACTIVELY take all  necessary steps to ensure spending being incurred is prioritised and in accordance with the government’s clear redirection guidelines. 

“If Ministries do not act PROACTIVELY Treasury will be forced to take more stringent steps to improve cashflow.

“ During this time Treasury is also trying to slowly build up SIG cash reserves to a more acceptable level,” he said.

Phillips said Provincial touring imprests or payments in particular will continue to be closely scrutinized along with other non-essential expenditure.

He said Treasury will continue to prioritise weekly SIG salaries, utility payments, provincial government grants, housing rental payments and MRD related payments.

Phillips said a further cashflow update will be provided on Friday 23rd July.


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