IN HIS budget presentation on Monday, Finance Minister Colm Imbert gave the country a mouthful. Literally.
By crowning his almost-four-hour-long speech with the announcement that he was removing VAT from a range of food items – biscuits, cooking oil, corn flakes, curry, juice, ketchup, sausages, pigtail and more – he made an important concession to the need to be sensitive to the plight of the population during this difficult time, and to temper fiscal policy with restraint.
Mr Imbert’s VAT announcement – which came days after a rise in bread prices renewed concerns over food-price inflation – was all the more notable given his own assessment that food prices will eventually subside in 2022.
In a presentation that at times took on the tone of a Ministry of Health media briefing, Mr Imbert also made clear that this was a budget no longer premised on the idea that covid19 is going away. The Finance Minister’s robust volleys at anti-vaxxer sentiment all but confirmed the Government’s approach to economic management is premised on finding a way to live with the virus, which also featured large in his account of the difficulties the country has faced.
Nevertheless, Mr Imbert presented a rosy prognosis for 2022 and the following two years.
“We envisage full reopening of the economy,” he boldly said. “The macro-economic outlook is now looking brighter.”
He noted healthy foreign reserves, almost nine months of import cover, projected increased non-energy activity thanks to the availability of vaccines, and a steady Heritage and Stabilisation Fund. In his assessment, the rate of economic contraction will hold firm, mainly due to increased returns from the oil and gas sector.
If Mr Imbert’s assessment seemed one of great expectations, he was willing to supplement it with a range of incentives designed to get the population to rise to the occasion. The “goodies” of this budget include numerous tax reductions which are designed to benefit exporters, tech and construction businesses, small and medium enterprises on the Stock Exchange and manufacturers, as well as help for individuals.
With rumblings in the Public Service over the last few days, Mr Imbert’s announcement that the Office of the Chief Personnel Officer will be tasked with negotiations for outstanding pay was clearly designed to assuage some of the dissatisfaction among a range of workers, including teachers and nurses.
But the minister side-stepped the issue of the timeline of implementation for the much-discussed property tax, even as he brought relief to 210,000 households that will benefit from utility rebates. Water and electricity rates remain subject to review by regulators and with possible increases looming, the assurance that low-income groups will be given subsidies only goes so far.
All in all, however, while not quite a feast or a culinary masterpiece, he offered the menu for a hearty meal.