 Budget office, spending its time. Very busy, teaming with excitement, everybody, they are accustomed with that process where they know that the effort that they are putting through will be down to the government of Sanquisha Prison in the national budget in parliament. So this is very important. Budget, I mean the average household operates on a summer or on a budget is the same concept applied to government. Does the government need like a budget, how much to spend here and how much to spend there? The average household is important for anybody to be able to do your budget, to be able to know how you spend the money or your income. And it's the same thing for government, it's the same thing for any household. It's different for the difference between the household and the government is that at the household level you do it for yourself and your family, at the government level you have to ensure that you allocate the resources efficiently across the country, across the economy. And that's what's important. Different types of budgets are there? There are three types of budgets, you have the balanced budget, this is where the anticipated revenue that you intend to raise equal the expected expenditure for the fiscal year. So therefore your revenue and your expenses they equal, so at the end of the day you have zero, so that would be what you call your balanced budget. And the other hand there's a surplus budget, this is where the expected revenue is greater or exceeds the expected expenditure. So then you have a surplus at the end or a bit of a savings. And finally you have a deficit budget, this is where your expected revenue is less than your expenditure or your expenditure exceeds your revenue. And therefore you have a deficit and this will lead you to borrow in order to finance the deficit. A surplus, balanced deficit, which among the three are the worst? A surplus budget is basically that your income is greater than your expenditure. So therefore you have you have money left over in order for you to save or money left over in order for you to invest. And so when you invest that means your wealth gets greater and this is where everybody wants to be at the place where you have the surplus budget. In Lucia's situation, maybe let's look at financial year 21 to 22. What kind of budget were we operating around that time? 21-22 I would say we were operating on a deficit budget, especially as we're dealing with the issues of COVID and you had the shutdowns, we were just coming out of it and so revenue was low and your expenditure was large because you had to deal with the issues of the current infosities and government had to pay for a lot of those things, pay for the testing and also try to provide income support to the vulnerable persons who needed it. So definitely we were dealing with a large deficit because we had to take care of those things and of course our income or revenue was not sufficient to cover our expenditure. Deficit budgets aren't always a bad thing, they are always negative, right? Your current deficit is basically where your current expenditure exceeds your current revenue. So for your current expenditure that would include wages and salaries, goods and services, transfer payments and interest and debt. And so if your current deficit, if you were in a current deficit means that you have to borrow in order to pay for your operations, for government operations. A second type of deficit would be your primary deficit and this is very important for any country because the primary deficit or primary surplus determines or signals the government's ability to pay interest payments on debt. So a deficit on the primary deficit indicates that government must borrow in order to pay interest payments and the overall deficit is the indicator which seems to you that your total revenue is less than your total expenditure, that you would not be in a deficit situation where you have to borrow in order to finance the deficit. There's an overall deficit, we've always been in an overall deficit because there's no time that we were not able to cover because we always had to borrow. So that's the overall where your total expenditure and your total revenue. Then there's a primary deficit where the one where you have to be able to cover your interest on debt and so and there's the current deficit. Now there have been the past where we have been the current surplus but that's a long time ago okay and so with respect to the the the primary surplus it basically where you know you ensure that the government is able to meet its interest payments on debt. So when you speak to the deficit it's important to know which one you're referring to. Okay so I would say in more recent times we have been running a primary deficit where we had to borrow in order to meet our interest on debt and you could understand why that happened as I was saying earlier on because the situation we have with COVID you had government revenue was less, we had the shutdown and so on and so we were running a primary deficit. Okay so and that happened also in 21-22 as well where the government run a primary deficit. However in 22-23 the approved estimates when we first started the budget the approved estimates indicated that we would have run a primary deficit. However during the course of the year for government operations we end up with a primary surplus of 29.6 million dollars rather than the 220 million deficit that we had initially projected. So usually when government goes to the house and approve the budget this is just a projection basically and so as the months go by during your implementation of your projects your programs and so on then you know you'll be able to get the true out turn of what's the true out turn basically whether you'll be running a surplus or whether you'll be running a deficit. During the course of the year for 22-23 we had a bit of a challenge financing challenges in terms of our expenditure especially on the project side a lot of our funding agencies in terms of getting the drawdowns for the loans or drawdowns for either for the grants as well we had a little bit of problem in terms of the of the timeliness of those drawdowns and basically this led to delays in implementation of the projects and so that also affected expenditure because once you have delays your expenditure will be affected so it reduced expenditure. So you have the combined the combined effect of reduction in expenditure improvement in revenue because the economy is in recovery recovering from COVID and so the revenue some revenue lines were doing very well so you have the combined effect of the recovery of the economy improved revenue as well as reduction in expenditure gave the result that we had in the primary surplus that you saw that you've seen for us for 22-23. Let's go back to our household analogy so the mother and father the husband and wife they're doing their budget they're going over their finances and they realize hey we have a little bit of a surplus and to tighten to the question how might the surplus benefit the household visa be a government. But I suppose for a household if you find that you have a surplus then it gives you the opportunity to invest in something that you've been meaning to for a while you'll be able to maybe buy something for your children's school books or whatever or invest in education or even invest in the house and I guess the same thing goes for the government with the surplus that with the surplus we're able to possibly invest in goods and services that would benefit the the entire population as well as invest in new and new projects that would assist MSMEs you know to expand the business to recover from you know the COVID-19 and so on. So you have a surplus does that mean your deficit is going down or has gone down once you I want you I want you to eke out the surplus does that mean your deficit went down? Okay with a surplus for instance the primary surplus which is what we experience in 22-23 not a current surplus but the primary surplus so the primary surplus basically indicate that you can you know pay your debts pay your your interest on your debts however we do not have an overall surplus we had an overall deficit so government still had to borrow in order to cover its deficit. Is that a good indicator of improving financial health to have primaries? Yes it signals to your creditors that you can pay the interest on debts and it's also it's a good indicator for investors as well in terms of what is happening with the country. Are we on a trajectory to continue experiencing the primary surplus in future financial health or in the near term? Yeah definitely as you could tell when the prime minister presented his budget you would have heard that he spoke about a primary surplus for 23-24 and this primary surplus is around 42 million dollars that we are projecting and so and that is basically because we as much as the expenditure may have increased projected to increase however we are also projecting an increase in revenue as well and there are many projects and investment projects in the budget that would allow for the economy to expand so for instance you have the MSME grant that was recently launched would allow the private sector to be able to get a combination of grant and loan and this would assist them in expanding their businesses. You also have the blue economy where we will be tackling food insecurity we have other projects for instance the in the carbon digital transformation project where the government is investing in technology improving its services to the private sector so all of those things together we expect to lead to economic growth. Overall deficits, we're still categorized as an overall deficit our budget? Well our budgets our budgets have been for overall we've been an overall deficit because government revenue have not been able to cover all of government's operations including capital investment projects. Being a deficit situation is not necessary bad for either the household or the government because sometimes you need to make investments in certain areas of your life as an individual or as the government and so your normal day-to-day revenue or income would not be sufficient to cover those investments that you'd want to make so for instance as the students you want to go and you know to university you would have to invest in that and that's what you probably necessarily may have to take a loan and so it is the same thing for the government so if the government would like to invest in a sector government would like to invest in new technologies the government would like to invest for instance the blue economy and so the government day-to-day revenue intake would not be sufficient to cover those type of investments so they will have no choice to borrow and so this will lead to deficit the important thing is that when you're borrowing have to be sustainable and that is what's important and so this speak to the when you look at your fiscal targets and so you ensure that you are in keeping with the fiscal targets and so when you're borrowing you ensure that you're borrowing for in to to enhance your investment opportunities in the country and so that at those times being a deficit can be a good thing okay let's talk about the budget because maybe the average household may focus their attention on their budgeting maybe month to month or maybe quarterly or so how long does the government take to prepare how long is the government in the budget process the project process is pretty a long one it's almost all year long but basically the budget process starts around April where you know we look at our the fiscal targets where the research and policy unit will look at the macroeconomic framework and based on that the budget office would then prepare what's called the budget ceiling and using the budget ceiling then we prepare what you call the first called circular there are two called circulars for the budget and so the first called circulars would go to all agencies and that would highlight basically the context and the framework in which the agencies would have to prepare the budget submission through the government okay and so from there then they would do the submissions until so that would be from September to October you get in the submission you're going through it with the Department of Economic Development and the budget office assessing those proposals and then making recommendations what you call the the budget technical committee and the budget technical committee then would do the iterations where it has to now go to another level which is the the budget policy committee where the prime minister precise at that level and after the prime minister would then you know approve for you to go to the budget subcommittee and then finally to cabinet and then you have the process where you do the second budget called circular informing the agencies what have been approved and then the preparation of the budget estimates towards for parliaments and then the preparation of the appropriation bill so that is a very long process and so as soon as the budget is approved by parliaments let's say for instance in April execution starts you begin to implement your budget but at the same time the budget office prepares itself for the next budget the next cycle so it's continuous so you have the implementation and planning happening simultaneously within the budget office for the countries within the eastern caribbean currency union the eastern caribbean central bank has set fiscal anchor which is the debt to ggp ratio to be at 60 percent of gdp by 2035 and in addition it is encouraged as the fiscal deficit should be should not be larger than three percent of gdp okay so working towards those potential levels or those potential goals is very important as you keep your debt level on a sustainable path because larger large deficit or higher deficit results in high proportion of government income or revenue being spent on interest payments rather than an investment project that can lead to growth and prosperity so therefore unsustainable debt can lead to instability and debt crisis where government we may need to borrow to meet its debt obligations and even being in a situation where it's difficult for it to meet its and to auto finance is are we anywhere near debt prices today well i have to say that st cruiser has been has had a very good reputation and st cruiser has always met his debt and so this is the first call on the consolidation fund and so we are happy to see that and i really um like that we remain in that in that situation yes