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The Government is not expected to return to the capital markets this fiscal year, but expected loan inflows from the multilateral financial institutions will assist in meeting financial obligations.
This was the word from Minister of Finance and the Public Service, Hon. Audley Shaw, as he opened the 2009/10 Budget Debate on April 23 in the House of Representatives.
He noted that the Government had successfully negotiated a total of US$951 million in credit from the World Bank, the Inter-American Development Bank (IDB) and the Caribbean Development Bank.
In addition, leading development banks have pledged to increase their support to the Caribbean and Latin America by providing up to US$90 billion to insulate the region from the global slowdown and to spur economic growth.
The World Bank has also been encouraging partner multilaterals to ensure that the external shock of the global crisis does not lead to a social and human crisis.
“Our multilateral partners strongly support the Government’s fiscal and monetary reform programme”, the Minister stated,” noting that “as a Government, we are committed to reducing our fiscal deficit towards attaining a balanced budget in the medium-term, which will directly impact the high interest rates that now exist in the economy.”
Turing to macroeconomic projections for the fiscal year, Minister Shaw informed that Gross Domestic Product (GDP) is expected to contract in the range of 2.5 per cent to 3.5 per cent, due to a downturn in sector activities as a result of the global economic crisis.
“Real sector activities are expected to be negatively affected by the declining demand for exports, lower capital flows, and a reduction in remittance flows,” he said.
Inflation is expected to be in the range of 11 per cent to 14 per cent, reflecting the anticipated impact of the recent depreciation in the exchange rate. “The impact of the depreciation, however, will be tempered by weaker growth in domestic demand. Lower prices for international commodities should also have a moderating impact on domestic inflation,” he stated.
The Finance Minister further informed that the current account deficit is projected to narrow to 14.2 per cent of GDP as a result of weaker demand for imports.
He noted that the projected contraction reflects a significant improvement in the deficit on the goods account from an expected sharp decline in the value of imports, mainly oil.

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