Tight budget

Tight budget

Gov’t eyes lower debt-to-GDP target by end of March

Senior staff reporter

Friday, February 15, 2019

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The Government yesterday tabled an $803 -billion budget for the 2019/20 financial year, showing a massive increase in public debt servicing, as well as increases to support its anti-crime activities and to meet outstanding payments for public sector employees based on recent wage negotiations.

However, despite an allocation of $385 billion to meet outstanding interest payments on debt commitments, the budget also included a $20-billion allocation for the Ministry of National Security to continue its fight against crime.

This year’s budget is a mere $500 million above last year’s $802.5 billion. But Finance and the Public Service Minister Dr Nigel Clarke said that the country should bear in mind that during 2018/19, the Government had made some one-off spending, including $21 billion in dividends from the PetroCaribe Fund, as well as $12 billion from increased tax revenues which had allowed for the paying of arrears to utilities like the Jamaica Public Service Company Limited and the National Water Commission, as well as small and medium-sized businesses to which it is indebted.

The Ministry of National Security benefited from an increase of approximately $1 billion in the recurrent estimates, increasing its recurrent budget from $70.8 billion to $72.4 billion for 2019/20. However, there is a giant leap of approximately $7.6 billion in the ministry’s capital estimates, increasing that budget from last year’s $12.6 billion to $20.2 billion.

The Government says the increased allocation to the ministry includes $2.5 billion which will, among other things, finance completion of the final phase of construction of the Jamaica Defence Force’s (JDF) Lathbury Barracks at Up Park Camp in Kingston and continue work on the Burke Barracks in Montego Bay, as well as upgrade the JDF’s Moneague Training Camp in St Ann.

An allocation of $1.2 billion is also included to facilitate construction of additional classroom space, computer labs and other vital areas; renovate 60 police stations islandwide; and commence construction of an Autopsy Suite/Coroner’s Building in Kingston.

The Ministry of Education, Youth and Information will benefit from a $4-billion increase in its recurrent budget, but this will primarily compensate teachers following their wage agreement with the Government in late 2018/19 after prolonged negotiations.

Similarly, a $1.2-billion increase in the recurrent expenditure for the Ministry of Health basically services the outstanding compensation owed to its employees.

As is customary, the bulk of the estimates, $385 billion, will be spent on paying down the interest on the Government’s debt.

The country’s debt at the end of December 2018 stood at $1.9 trillion, which was 0.1 per cent or $2.4 billion over the $1.941.7 trillion recorded at the end of March 2018.

The Government says that the increase was entirely driven by the external portfolio, which rose from $1.184 trillion at the end of March 2018 to $1.192 trillion at the end of December, an increase of $7.1 billion or 0.6 per cent.

The Government’s “medium-term debt management strategy”, which was tabled yesterday in the House of Representatives with the new budget, stated that the increase was largely due to the depreciation in the Jamaican currency, relative to the US dollar, as the stock of central government external debt in US dollar terms decreased by approximately US$71.8 million.

Last week the International Monetary Fund confirmed that Jamaica has made significant progress in reducing its debt from 147 per cent of gross domestic product (GDP), and is projected to fall below 100 per cent by the end of the current fiscal year in March.

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