ENG-1966 — Page 65

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FINANCIAL STRUCTURE

runs ensued on a number of local, mainly small, banks culminating in the failure of two of them in 1965. The export trade, however, remained buoyant. The deficit of 1965-6 reflected this temporary setback and was due partially to special measures arising from it but mainly to the consequence of a very large reduction in land sales revenue. It appears, moreover, to foreshadow a more sub- stantial break in the pattern of annual surpluses than was the case with the 1959-60 deficit.

The budget for 1966-7 introduced increases in taxation estimated to produce an additional $90 million, but it will be seen from Appendix IX that a deficit of $94 million for the year is, never- theless, anticipated. No significant recovery in land sales revenue is expected for this year. The deficit, of course, indicates that revenue will be unable to finance all the capital expenditure arising from the government's very heavy programme of non- recurrent public works, mainly for more schools, medical facilities, housing, water supplies, roads and land development schemes. As has been the case in several past years the basis on which the deficit for 1966-7 was estimated may prove to be pessimistic but, on the other hand, this year there are certain abnormal expenditure items (in particular salary increases, including back pay amounting to $42.5 million, in respect of the Public Service) which were not allowed for in the estimates.

Revenue and expenditure for the last two years, with the estimates for this financial year, are detailed and compared in Appendices VI and VII. In 1965-6 the revenue of $1,632 million was $20 million less than the original estimate. The head showing the largest excess was rates with $31 million. This was due mainly to assessments on new premises but there were also some increases in rateable values. There were shortfalls on two recurrent heads (duties and water revenue) but all other recurrent heads produced surpluses. The most serious shortfall was in capital receipts from land sales, which were below the estimate by some $118 million. Expenditure for the financial year 1965-6 was $1,769 million against the estimate of $1,711 million, showing an excess of $58 million. A significant factor was the expenditure of $587 million on civil engineering, water and building projects under public works non-recurrent. The estimates for this financial year anticipate an increase over the 1965-6 results in revenue under duties and internal revenue,