Government trimmed its current-account spending by more than seven percent and booked an increase in revenues during the first quarter of its fiscal year, the Ministry of Finance revealed today.

Finance Minister Bob Richards said in yesterday’s fiscal performance update that the numbers — which showed a deficit of $63.8 million for the three-month period from April through June — were “in general” tracking in line with budget estimates.

Government paid out debt servicing costs of more than $40 million during the quarter, as the gross debt figure stood at $2.185 billion at the end of June.

Economic data from the first half of the year showed some “modestly positive signs in the economy”, Mr Richards said, though he added much more work needed to be done.

Total employment income on the Island fell 0.3 percent in the first quarter, partly as a result of Government cuts, but there were bright spots as the long-suffering construction sector paid out 9.2 percent more to employees and international business employment income rose 6.6 percent.

The statement said that Government revenue for the first quarter, from April through June, totalled $214.8 million, up by $4.8 million, or 2.3 percent, compared to the corresponding period in 2013.

“The primary reason for this increase is due to stronger ‘Other Revenue’ collections and this increase resulted in additional revenue of $4.2 million,” the statement adds.

“Payroll taxes to date are approximately $1.6 million above 2013 collections while stamp duty collections are $1.4 million higher than 2013. These increases more than offset $1.6 million and $1.4 million reductions in Customs duty and land tax, respectively.”

Current expenditures, excluding debt service, were $229 million — $18.3 million less than Government spent in the first quarter of last year, representing a 7.4 percent fall.

The Ministry said the spending cuts were mainly a result of the furlough which has involved public-sector workers taking off one unpaid work day per month.

Capital spending also fell by $8.4 million from 2013, when work to repair Heritage Wharf added to the bill, so total current and capital spending was $26.6 million less than last year.

For the full year, Government has budgeted for spending of $1.1 billion, including debt service, and has a revenue target of $902 million, while capital spending is expected to be $61.9 million.

Debt servicing costs rose by $7.1 million to $40.3 million as a result of higher debt levels. Of this, $28.4 million went on interest payments and $11.9 million was paid into the Sinking Fund, which Government uses for periodically paying off the principal on long-term debt.

During the quarter, Government paid off $120 million of debt in the form of private placement notes.

The economic update noted that 535 international companies and partnerships were incorporated in the first half of 2014, up 13.4 percent on last year.

Redevelopment of the Fairmont Hamilton Princess and the Pink Beach Beach Club helped to stimulate the construction industry and the value of work put in place in the first quarter was $56.2 million — up 22.2 percent from last year.

Also notable was a decrease in bank lending. Loans and advances on the balance sheets of local banks contracted by $499 million, or 5.8 percent, in the first quarter, compared to the same period in 2013.

Mr Richards has publicly criticised banks for what he described as “ultra-cautious” lending at a time when the economy is most in need of an injection of credit. Bank bosses have said they want to lend more, but there is a lack of demand from qualified borrowers.

Mr Richards said: “Economic data for the first quarter of this year are consistent with our expectation that the economy is slowly starting to move in the right direction. While there are some modestly positive signs in the economy, there is still a lot more work that needs to be done in order to improve overall economic conditions.

“The Ministry expects that the initiatives outlined in the 2014/2015 Budget Statement, as well as other future initiatives, will be the catalysts that lead to improved economic conditions in the medium term.”