The government budget for 1993 foresaw total expenditures of SRe1,335.6 million consisting of SRe1,078.7 million in current expenditures, SRe232.5 million in capital expenditures, and SRe24.4 million in net lending. The proposed spending was 6 percent higher than the 1992 level. Total revenues were budgeted at SRe1,186.1 million in 1993, consisting of SRe1,122.6 million in current revenues and SRe63.5 million in grants. The projected deficit for 1993 was SRe149.5 million, compared with a 1992 budget deficit of SRe94.5 million. The 1994 budget projected a 6 percent decrease in expenditures, leading to a surplus of SRe64 million rather than a deficit. The 1994 budget also relaxed import controls and set forth a five-year development plan to increase private sector economic participation, increase employment and foreign exchange earnings, reduce taxation and the inflation rate, and improve social welfare. Interest on the public debt consumed more than 18 percent of current expenditures.

Among other leading components of 1993 current outlays were education (10.7 percent), health (7.0 percent), transportation and tourism (5.6 percent), and subsidies to parastatals (4.3 percent). Defense spending was cut by 35 percent between 1992 and 1993--from 7.8 percent to 5.0 percent of the total budget. The government's contribution to the SPPF--SRe9.6 million in 1991 and 1992--was eliminated in 1993.

The main revenue sources were a trades tax that included taxes on imports (50 percent of total revenues estimated for 1993) and a business tax based on profits (12.4 percent of total revenue). Various fees, charges, dividends and interest, rents, and Social Security Fund transfers made up most of the remaining budget receipts. The government's program of social services, defense spending, and new parastatals had generated growing budget deficits that peaked at 20 percent of GDP in the recession year of 1986. Austerity in public spending and new taxes had resulted in some improvement by 1992 the deficit was limited to 4.4 percent of GDP but was expected to rise to 6.5 percent in 1993. The continued excess of spending over receipts, combined with lower foreign assistance levels, remains a worrisome problem.

Data as of August 1994