Mr. Speaker, in the Review of Economic Performance and Supplementary Estimates submitted to this House on 13th July, 2006, we used the opportunity to update the budget outturn for 2005, as the 2006 main budget was based essentially on data up to the end of September 2005.
Mr. Speaker, the outturn for 2005 remains basically the same as presented in the 2006 Review of the economy. I would like to take this opportunity to stress that satisfactory and focused policy implementation has underpinned the remarkably good economic performance since the NPP Government assumed the management of this country.
The overall fiscal deficit was reduced from 6.7 per cent of GDP in 2002 to 2.3 per cent of GDP in 2005. Total public debt declined substantially as a result of both fiscal prudence and debt relief under the enhanced Heavily-Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI) – from about 24 per cent of GDP in 2002 to about 10.8 per cent of GDP in 2005.
The fiscal consolidation resulted in a significant reduction in domestic debt service and allowed the “crowding-in” of private sector investment through a sharp drop in interest rates. It also created the needed fiscal space for increasing poverty-related spending from 4.7 per cent of GDP in 2001 to 8.5 per cent in 2005.
