Breakdown of UK Budget Aid Package for Montserrat

BRADES – The Department for International Development (DFID) is providing £19.2 million/EC$79.7 million towards the Government of Montserrat’s 2015/16 recurrent budget, according to the funding business case.

As part of the Medium Term Expenditure (MTEF) framework, three-year forecasts of GoM revenues and expenditure have been produced. However DFID said there are “considerable uncertainties around the revenue and expenditure forecasts for 2016/17 and 2017/18, including from the outlook on investment, tourism and the future of the economic development agency (MDC). In addition, GoM currently lacks the technical capacity to fully operationalise the MTEF framework, and is in the process of recruiting a Chief Economist and Chief Statistican to support more robust budget forecasting and planning. As a result, this business case covers 2015/16 only. DFID plans to have further discussions with GoM on the potential to move to a three year DFID budget settlement once these constraints ease.”
According to documents found on the UK Development Tracker, £1.0 million (EC$4.15 million) of the total was transferred into the recurrent budget following the closure of the Montserrat hospital project as of the end of June. “The £1.0 million therefore represents a reallocation of existing OTD resource. 75% of this health sector funding is CDEL (Capital Departmental Expenditure Limit), principally for the purchase of equipment in Glendon hospital, and 25% is RDEL (Recurrent Departmental Expenditure Limit) for health service provision. Within the budget aid project, DFID will ring-fence the overall £1.0 million and also ring-fence the respective capital and recurrent components of it.”
“Excluding the transfer of OTD funds from the health project, DFID’s 2015/16 budget aid contribution is EC$75.5 million, which as a share of the budget is unchanged from 2014/15 at 56%, and within OTD’s current Operational Plan target. This has been achieved through a combination of general public sector spending restraint, and higher tax revenue targets in 2015/16. Total domestic revenues (principally from tax) are assumed to grow by approximately 6% next year. The 2015/16 budget accommodates higher spending in the following priority areas:

i)A 10% increase in recurrent maintenance as part of ongoing DFID efforts to address inadequate GoM routine maintenance of public assets;

ii)Long-Term Technical Capacity (LTTC) support to bring in international expertise has increased by 80%, to EC$0.9 million. This includes filling gaps in public financial management, audit, procurement and commercial development, economics and statistics, a chief magistrate and a senior crown counsel. These are urgently required to help better manage fiduciary and governance risks.

iii) Funding for long-term skills development through the Annual Country Training Scheme has gone up by 14%.

iv) The 2015/16 budget includes EC$0.4 million to finance new social welfare and protection measures, including foster care support and an “incentives to work” scheme. In addition, the budget sets aside EC$1.0 million of Contingency Funds to take forward any proposals arising from the Lucy Faithful Child Safeguarding Report produced last week. This is based on a preliminary estimate of potential costs of resulting GoM measures that could not be addressed through DFID’s existing ‘Safeguarding Children in the Overseas Territories’ programme.

v) The budget provides EC$0.3 million to implement non-discretionary changes in UKG passport regulations.

vi) The overall settlement also accommodates higher general inflation in the Montserrat economy since the 2014/15 budget.
The settlement includes a number of ring-fenced element. These include the Access Subsidy (of EC$6.1m) and Short-Term Technical Cooperation (EC$2.6m) which reflect the core budget objectives of “maintaining safe, reliable and regular sea access” and “improving public sector capacity through provision of technical assistance”. In addition, there is a Small Capital Assets Fund (EC$1.8m) for the purchase of small capital items of a recurrent nature. This was ring-fenced in 2013/14 in response to a perceived failure by GoM to adequately provision to replace small capital assets as they came to the end of their useful life. A ring-fenced Contingency Fund (of EC$2.5m) was also set up in 2013/14 following a series of in-year calls on additional DFID funds by GoM to meet unexpected, unbudgeted liabilities (such as from legal payouts). Use of the Contingency Fund is governed by a protocol which requires pre-approval by DFID, before draw-down takes place. The transfer of funds from the hospital project is also ring-fenced to ensure both their use for that purpose and that the funding split between RDEL and CDEL within this is clearly enforced.

BUDGET BREAKDOWN
Montserrat Budget Aid 2015/16 – Recurrent Expenditure – £14,797,531
Montserrat Budget Aid 2015/16 – Access Subsidy – £1,506,173
Montserrat Budget Aid 15/16 – Long Term Technical Cooperation and Annual Country Training Scheme – £637,037
Montserrat Budget Aid 15/16 – Short Term Technical Coorporation [Provision for short term technical skills and advice] – £641,975
Montserrat Budget Aid 15/16 – Provision for Health Services – £250,000
Montserrat Budget Aid 15/16 – Provision for Health Capital Spend/Equipment – £750,000
Montserrat Budget Aid 15/16 – Strategic Support to the Government of Montserrat – £363,784
Montserrat Budget Aid – Child safeguarding initiatives – £253,500

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