Nearly one and a half million pounds of extra funding will pumped into St Helena to improve health care and education, if UK ministers accept proposals from the 2013 aid mission to the island.
That is on top of £12 million to cover the ongoing shortfall in St Helena Government’s annual budget.
The £12m amounts to a slight dip in funding – less than one per cent – but if the extra £1.4 million is approved, the island will actually see an increase in aid.
The proposal has emerged from the annual Development Assistance Planning Mission (DAPM) to the island, which has seen UK experts negotiating with a team of eight island councillors and officials.
They have agreed an aide memoire that reveals concerns that health and social services targets were not being met.
The extra funding is “to fill critical capacity gaps in essential medical services and provide support for education.”
But the mission has warned that some savings plans looked unrealistic.
It said: “We were concerned that some directorates may have suggested savings that could not be realistically achieved.”
It did not say which departments caused concern – but alarm has been raised on the island about cuts in health spending.
Savings should be made through administrative costs, not front-line services, it said.
It also saw a big opportunity to save money through more efficient procurement – buying-in of goods and services – with no progress in the past year on adopting agreed guidelines. An adviser arrived in January 2013.
The aide memoire says the mission was pleased that it had not have to agree the Grant in Aid package, except on shipping.
The mission found a “mixed” picture on the island’s home-grown economy. Work on the airport had moved quicker than expected, pushing up employment and population, but it was unclear how much this had boosted wages in the rest of the economy.
Investment in tourism had been slower than expected.
Inflation had fallen to 4%, from 6% at the beginning of 2012, but this was partly due to the weakness of the South African Rand.
Domestic revenue was forecast to rise by a million pounds over the year, to £11.3 million in 2012/13, in line with predictions.
Growth of 13% is forecast in the next two years, dipping to 10% in 2015/16.
Income tax revenue had gone up by a third (35%), driven by airport activity.
Spending was also broadly in line with forecasts, “leaving a near-balanced budget.”
The mission welcome progress on supporting economic development and said Enterprise St Helena had built a good platform to move forward on its objectives.
The government’s budget planning had improved, to fit better with the priorities of improving health, education and economic growth.
Improvement in tax collection had been “modest”, but more substantial gains were expected in 2013/14. A new computer system should improve detection of tax evaders.
“A rigorous audit of taxation returns is planned,” says the aide memoire. Fees are to be reviewed.
The aid mission welcomed plans to publish meaningful information on the government’s performance. Information on the SHG website need to be easier to understand, it said.