CARETAKER Finance and Treasury minister Rick Hou has released information about Government expenditure up to the end of June, 2014 prior to deliberations of the recent Supplementary Budget Bill by Parliament in the past two weeks.
Minister Hou outlined that consolidated expenditure for the first half of 2014 was $1,621.8 million against revised pro rata 2014 budget estimate for the first half of the year of $1,861.8 million or 13 per cent under spent.
He said that while recurrent expenditure was $167.1 million under spent for the first half of 2014, this included significant under spends in donor budget support.
“A significant amount of donor funding relates to activities that will occur later in 2014, including the election, so expenditure is still expected to be on budget,” Minister Hou said.
He also said that the total domestic recurrent expenditure for the first half of 2014 was 3 per cent above the 2014 pro-rata budget estimate, which largely reflected the response by the Government to the April floods.
The domestic recurrent budget and expenditure includes the costs of providing general services of government, including health and education, and supports the costs of payroll and other charges items such as electricity, water, maintenance and capital expenditure.
The total payroll expenditure by all ministries was 6 per cent below pro-rata budget for the first six months of 2014.
The payroll expenditure is expected to close the gap with the budget estimate over the remainder of the year as the Cost of Living Allowance adjustment of 3.5 per cent from 1 July takes effect and as vacant positions are filled.
Minister Hou outlined that the total ’Other Charges’ expenditure by all ministries was above pro-rata budget by 8 per cent in the first half of 2014.
Minister Hou said that donor funded recurrent spending was 50 per cent under spent against the pro-rata budget.
He suggested that donor budget support is an area that the Government has identified as requiring improvement, both in relation to budgeting and expenditure.
The coordination of donor budgets is complicated as donors’ budget cycles do not match that of the Solomon Islands Government.
Additionally, execution of this expenditure typically requires approval from donors and significant levels of reporting, which contributes to under spending.
Minister Hou stated that domestic and donor funded development expenditure was 20 per cent below pro rata budget estimate in the first half of 2014.
This reflects a positive improvement in the proportion of development expenditures undertaken as against previous years.
Minister Hou suggested that significant under spending recorded in most ministries was due to delays in the commencement of projects, largely because of delays in proper coding and procurement processes; delay in tender processes; and delay in land issues.
Overall, development projects are anticipated to be implemented once all procurement and tender processes are completed and expenditure should be on track for the remainder of the year.