Prime Minister Dr. Godwin Friday Thursday presented an EC$1.9 billion (One EC dollar=US$0.37cents) fiscal package to Parliament, a two per cent increase over the approved budget for last year.
Friday, who is presenting his first Estimates of Revenue and Expenditure since his New Democratic Party (NDP) won last November’s general election, said that financing for the 2026 budget is expected to come from current revenue of EC$906.8 million and from capital receipts totalling EC$978.7 million.
On Wednesday, the Finance Committee of Parliament met to consider the 2026 fiscal package which is now being debate on Thursday.
Prime Minister Friday, who is also the Finance Minister, said the 2026 recurrent estimates, not including amortisation and sinking fund contributions, will amount to EC$1.01 billion.
‘Consequently, there is a current deficit of $105.5 million in these Estimates,’ Friday said, noting that there have been deficit budget over the years.
‘Our challenge is to ensure that we can shrink those and make sure that we do so, and that is one of the tasks that we will set our minds to as we go forward,’ he said ,noting that the current revenue for this year is EC$96.9 million.
‘A slightly weaker revenue projection for 2026 is mainly on account of a 40 per cent drop in non-tax revenue occasioned by an EC$20 million reduction in the amount budgeted for reimbursements.’
Friday told legislators that last year, the then government engaged the World Bank in a retroactive financing arrangement under the BERRY project, where local funds spent on cleanup after Hurricane Beryl would be reimbursed.
‘To this end, the budget for reimbursement in 2025 was significantly increased by EC$20 million. However, in 2026 there are no expectations of a similar reimbursement, so the budget is significantly reduced.’
Prime Minister Friday said the revenue from tax sources is expected to contribute EC$762.6 million and non-tax revenue to gross EC$144.3 million.
He said the tax revenue is expected to increase marginally by 0.7 per cent. This is due to taxes on international trade and transactions expecting to increase by EC$4.5 million or 1.9 per cent.
At the same time, taxes on income and profits are expected to increase by 6.5 per cent to EC$129 million.
Non-tax revenue collected in 2026 is expected to be EC$144.3 million, coming mainly from the sale of goods and services, which is projected to generate EC$117.7 million in revenue.
Friday said this amount is estimated to be EC$6.3 million above the 2025 budget and hat revenue for non-tax sources is also expected to come from inflows on property, income and fees and fines.
The total estimated recurrent expenditure, inclusive of amortisation and sinking fund contributions, is EC$1.31 billion, 13.7 per cent or $157.6 million above the 2025 budget.
The recurrent expenditure for 2026 comprises current expenditure of EC$1.012 billion.
The amortisation is EC$270.9 million, with sinking fund contribution of EC$25 million, so that the recurrent expenditure is EC$1.308 billion.
Friday said current expenditure increased by 10.9 per cent.
‘Amortisation is worrying, up by 25.8 per cent and sinking fund contributions by 13.6 per cent,’ Friday said.
The 2026 budget increase includes the compensation of employees, which has increased by EC$39.1 million or 9.6 per cent. Pensions increased marginally by 0.6 per cent or EC$4.4 million and transfers for training, grants, contributions to local or regional organisations are expected to go up by EC$27 million.
Friday said EC$93.5 million is provided to pay pensions for retired civil servants and the government counterpart contribution to the National Insurance Services (NIS) for civil servants.
‘This amount is comprised of EC$78.4 million for pensions and EC$15.1 million for NIS contributions.
Meanwhile, the 2026 capital estimates will amount to EC$$577.3 million, 17.4 per cent or EC$121 million lower than the originally approved capital budget for 2025.
The Finance Minister said the government’s public sector investment programme for 2026 ‘reflects this lower but more focused spending on functional areas of economic affairs, social protection, and Health and Community Affairs.
‘And in 2026 activity would continue, and in some areas, be ramped up in construction and repair of a number of roads, river and sea defences, schools, clinics and other public buildings.’
Friday said there are significant capital investments to be made.
He said the ministries of transport and works will receive EC$115.5 million, the Ministry of Education and Vocational Training will get EC$63.5 million. The Ministry of Higher Education, Grenadines Affairs, including seaports and airports, will get EC$78.4 million, while the Ministry of Finance and Economic Planning will get EC$190.1 million.
Friday said the Ministry of Housing and Informal Settlements will get almost EC$40 million.