THE Government will not raise taxes to plug a projected $1billion budget deficit, opting instead to grow the economy and protect businesses and households already grappling with rising living costs.
Presenting the 2026-2027 National Budget yesterday, Minister for Finance Esrom Immanuel said Government revenues had taken a significant hit from the global fuel crisis, resulting in a projected shortfall of nearly $200million.
“Unfortunately, following the impact of the global fuel crisis, our tax revenues is projected to decline to $3.3b, almost $200m lower than earlier anticipated,” Mr Immanuel said.
He said total Government revenue, including tax and non-tax collections, was now estimated at $3.82b for the 2026-2027 financial year.
“With a total revenue of $3.82b and total expenditure of $4.87b, the fiscal deficit is set at $1b or 7 per cent of GDP for the 2026-2027 Budget.”
Mr Immanuel said public debt was projected to rise to about $12.6b by the end of July 2027, equivalent to 84.8 per cent of gross domestic product.
He defended the 7 per cent fiscal deficit as a necessary response to the global fuel crisis, saying it allowed Government to maintain essential spending despite declining revenues while accommodating an additional $200m in new expenditure.
“If revenues had not declined due to the crisis together with the economic slowdown, our deficit would have been below five (5) per cent and debt would have been much lower at around 83 per cent of GDP.”
Looking ahead, Mr Immanuel said the Government intended to reduce the deficit to around 3 per cent of GDP to place public finances on a more sustainable path.
“With a 3 per cent deficit, our debt to GDP ratio will decline much faster and government will be able to finance its deficit without putting pressure on domestic market or getting overly reliant on external debt.
“We cannot and should not try to increase our revenues by merely increasing taxes.
“That is not an option as it will worsen the cost-of-living challenges, further add to the cost of doing business and slow down the economy further with negative consequences for all.”
Instead, Mr Immanuel said the Government would focus on stimulating economic growth while maintaining a stable tax regime.
“What we need to do is to grow the economy, which will subsequently increase our tax revenues.
“To achieve this, we have to keep our tax regime stable, with focus placed on supporting the private sector to take the lead.”
