Fiscal Deficit will be 6.9 Per Cent – Finance Minister


Jamaica’s debt to Gross Domestic Product (GDP) will decline from 143.4 per cent to 126.7 per cent at the end of this fiscal year, and the fiscal deficit will drop from 7.3 per cent to 6.9 per cent.
This was disclosed today (February 17) by Minister of Finance and Planning, Dr. Omar Davies, at a special meeting in Parliament to preview the 2004/05 Budget.
The Minister noted that the Government had projected the fiscal deficit to reach between 5 and 6 per cent in the 2003/04 fiscal year. He said that a variation of just under one per cent was an important achievement, considering the higher than budgeted expenditure on domestic interest payments of $8.7 billion, $5.8 billion for wages and salaries, as well as the $1.4 billion fallout in revenue.
Dr. Davies explained that the changes made to the tax package of 2003/04 as well as delays in implementation and amendments to the tax legislation had resulted in the revenue shortfall.
The Minister noted however, that the revenue shortfalls were offset by higher than anticipated proceeds from the 2 per cent user fee imposed on manufacturers, receipts from the Financial Institution Services (FIS) as well as increased bauxite levy payments to Government, buoyed by increased output and higher prices. He also pointed out that the Government had slashed its recurrent and capital programmes for the current fiscal year by $7.1 billion.
Dr. Davies said the Net International Reserves (NIR) would close the fiscal year in March at nearly $1.4 billion, confounding critics who had said that the bottom had fallen out of the NIR because of huge withdrawals made earlier in the year to cover loan repayments.
Turning to the matter of the amount of money owed by the Government, the Minister said at the end of December the figure stood at $4 billion. However, he noted that the amount of money owed to the Government was over $15.5 billion.
Minister Davies said the Government’s record of six consecutive years of single-digit inflation would be broken this year, when inflation is projected to reach 15 per cent, but that in the next fiscal year the Government had targeted a nine per cent inflation rate.

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