ENG-1968 — Page 62

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FINANCIAL STRUCTURE

surplus of $78 million, but ended on a somewhat restrained note. While the export trade remained buoyant the property market turned dull and this, to a degree, affected other sectors. The deficit of 1965-6 reflected this temporary set back and was due partially to special measures arising from it but mainly to substantial increases in civil service emoluments, some back-dated to the previous year, and to a large reduction in land sales revenue. 1966–7 saw a swing back into surplus which has persisted despite further falls in land sales revenue and the continuation of the upward trend in the recurrent expenditure/revenue ratio. The latter was 73 per cent in 1967-8 and is estimated at 79 per cent for the current financial year. The swing was assisted by a small increase in taxation but a more important factor was a falling-off in capital works expendi- ture as certain major projects, particularly the Plover Cove Reservoir Scheme and certain major land development schemes, neared or reached completion and were not yet replaced by new projects of comparable magnitude. The 1967-8 budget anticipated a deficit of $37 million but a surplus of $133.5 million was achieved in spite of civil disturbances which plagued half the year and cost $33 million in special expenditure. The main cause of the surplus was that although revenues were unaffected, these was a marked under- spending due to some degree of diversion of government activity to dealing with the disturbances. The Colony's General Revenue Balance did not, however, receive the full benefit of this surplus as some $43.2 million was absorbed in the loss its assets suffered from the devaluation of sterling in November 1967.

The budget for 1968-9 introduced no taxation changes but antic- ipated a $13 million deficit, while not taking into account salaries increases for the civil service, announced later in the year. This deficit, of course, indicates that revenue was not expected in this year to finance all the capital expenditure arising from Government's very heavy programme of non-recurrent public works mainly for more schools, medical facilities, housing and roads.

Revenue and expenditure for the two previous years, together with the estimates for this financial year are detailed and compared in Appendices VI and VII. In 1967-8, revenue at $1,900 million was $14 million more than the original estimate. The head showing the largest excess was internal revenue up $23 million due mainly to