Debt-to-GDP ratio above limit: Report


A TREASURY report says the debt-to-GDP ratio will be pushed up to 34.9 per cent — which is 4.9 per cent above the legislated debt limit of 30.
“Based on the 2017 mid-year economic and fiscal outlook projections, total public debt is projected to increase to K25.939 billion, pushing the debt-to-GDP (Gross Domestic Product) ratio to 34.9 per cent which is 4.9 percentage points above the legislated debt limit of 30 per cent,” the report said.
It said the 2017 Budget deficit increased from K1.87bil to K2.8bil, with the debt-to-gross domestic product ratio rising to 34.9 per cent.
The report said the 2017 Budget planned deficit was K1.876bil.
“The Government planned to finance the deficit through a net borrowing of K1.838 million and asset sales financing of K38mil,” it said.
“The mid-term review now projects net borrowing for 2017 of K2.82bil, an additional debt issuance of K981.8mil, translating to an overall total debt-to-GDP ratio of 34.9 per cent.”
The report said the fiscal outlook for 2017 had weakened in the first half of the year.
“This is expected to result in a net borrowing (deficit) of K2820.4mil or 3.8 per cent of GDP, which is an increase of K944mil, compared to the initial net borrowing (deficit) of K1876.5mil or 2.5 per cent of GDP at the time of the 2017 Budget using new GDP,” it said.
“This primarily reflects a projected shortfall in tax and non-tax revenue receipts, particularly from company income taxes, and dividends from State entities and projected increase in expenditure, particularly compensation of employees.
“Total revenue and grants are projected to be lower than the 2017 Budget estimates.
“Total revenue is projected to be lower by K514mil. Total expenditure and net lending are projected to be higher by K430.1mil than the 2017 Budget estimates.
“Debt-to-GDP ratio at the time of the 2017 Budget was 29 per cent, using new GDP.

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