First Supplementary Estimates for 2024/25 Tabled in the House of Representatives

Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, on Tuesday (October 8), tabled the First Supplementary Estimates for fiscal year 2024/25 in the House of Representatives.

The estimates provide for an increase in total government expenditure and payments by approximately $40.7 billion.

This will be financed primarily through additional projected revenue and grant flows arising from non-tax revenue and tax revenue inflows.

The estimates will be reviewed by Parliament’s Public Administration and Appropriations Committee.

Also tabled were the Fiscal Policy Paper FY 2024/25 Interim Report and the Public Bodies First Supplementary Estimates of Revenue and Expenditure for the Year ending March 2025.

Dr. Clarke advised the House in his presentation that the increased expenditure is entirely due to expenses on the recurrent side of the Budget where both debt and non-debt expenses have risen.

Recurrent programme expenditures increased by $31.3 billion reflecting, among other things, additional expenses, totalling $11.8 billion, to initiate post-Hurricane Beryl recovery.

Also increasing are provisions for sums related to the Shared Prosperity through Accelerated Improvement to our Road Network (SPARK) Project, to facilitate preparatory activities such as design and the ordering of pipes.

Wages and salaries are also slated to increase by $11.6 billion, primarily due to higher than originally programmed third-year costs under the restructured public-sector compensation system’s implementation.

Interest payments are estimated to be $9.6 billion higher than originally budgeted, reflecting the impact of adjustments in interest and exchange rates.

However, Dr. Clarke said the increased recurrent expenditure is somewhat countered by a $12.1-billion decrease in capital expenditure.

This, he pointed out, represents a fall in the contingency provision for capital programmes, consequent on the need to accommodate post-hurricane expenditure as well as preparatory activities for the SPARK programme.

Dr. Clarke emphasised that Jamaica experienced significant economic growth shocks resulting from low expansion in tourism out-turns arising from a United States (US) travel advisory as well as Hurricane Beryl’s impact in July.

He said the hurricane was a major factor influencing the adjustments reflected, “which translates into deviations of the macro-indicators from the performances anticipated during the Budget preparation period”.

“The most significant adjustment is to the projected real growth in gross domestic product (GDP), which is estimated to decline by two percentage points from an expansion of 1.8 per cent to a contraction of -0.2 per cent,” the Minister further informed.

Dr. Clarke assured that the Government is managing the economic growth shocks by utilising flows arising through the disaster risk financing system as well as overperformance of the bond issue associated with securitisation of the Norman Manley International Airport.

“These have allowed for the continued downward trajectory in Jamaica’s Debt/GDP ratio while also maintaining most of the planned expenditures, and also addressing the unplanned expenditures having to do with the impact of the hurricane,” he added.

The Minister also advised that adjustments to the Public Bodies Estimates primarily arise from the need to channel additional Central Government subventions to a number of these entities.

Meanwhile, Dr. Clarke said the economy grew by 1.2 per cent during the first quarter of calendar year 2024, between January and March, followed by a 0.2 percentage point out-turn in the second period, between April and June, which, he pointed out, was lower than projected.

“The reduced second-quarter growth rate reflects low tourism growth arising primarily out of a travel advisory issued by the United States of America. In the third quarter of the calendar year (July to September), Jamaica experienced Hurricane Beryl, the most devastating hurricane to impact Jamaica since Hurricane Dean in 2007. The economy is, therefore, expected to register a decline of 2.1 per cent in the third quarter of the calendar year, as a result of the economic dislocation caused by the hurricane,” he informed.

Dr. Clarke said these developments collectively represent “a significant growth shock which is… expected to result in a contraction of -0.2 per cent for fiscal year 2024/25, down from the initially expected expansion of 1.8 per cent”.

He pointed out that the Government has been able to make adjustments and execute transactions, such as the recent securitisation that facilitates the continued downward trajectory of the public debt ratio towards achieving the target of 60 per cent of GDP by 2027/28.

This, the Minister added, is despite the challenges arising from a growth shock as significant as the expected two percentage points deviation in the 2024/25 growth outcome.

Dr. Clarke said the experience, so far, this year is yet another reminder of the importance of building resilience and the necessity of always having buffers and shock absorbers.

“These include being ahead of your targets when the opportunity presents itself,” he maintained.